PATENT VALUATION PLATFORM
Patent valuation is underlying confidentiality. Even most M&A deals are kept secret. Only some become visible and some are even announced in the news. Here in some cases the success of patent valuation using the emposis database can be proved.
In collaboration with big IP-transaction agencies, IP consulting companies, patent attorneys, IP departments of big sized innovative companies and scientific IP researchers, transaction data, valuation details and methodologies have been processed, back tested and calculated. Also the currencies for the certain year of trade must be considered: All values in emposis are in Euro.
Here are just some examples that have come visible in the public. emposis offers current data as well as historical valuation data, back to the year 2010 - so it is seeable what emposis calculated for a certain year, when a patent was factually traded.
The patent values are offered in a value range. The value range is determined by the medium failure that occurs due to the mathematical similarity algorithm.
Patent valuation offers a realistic value impression which is very conservatively calculated. But a value is not a price that is finally paid. Often a paid price include additional services or even much higher prices are paid when a certain patent has a high strategic meaning, i.e. to lock out certain competitors. So even failure rates of 100% is an excellent result. A patent valued with a cost approach or an income approach (see FAQ) result often in failure rates that are much higher than 1,000 %
*) USD- values were recalculated to EURO based the exchange rate for the trade date.
The main principle to determine a value based on indicators is not new. The value of a used car or of a real estate is determined the same way. Example: location, square meters, year of construction, amount of rooms, equipment etc. these are all indicators. And without ever have seen a certain real estate, a value range can be assigned. For this purpose in real estate business catalogues and databases for different regions are available – for different years. The calculated value is a market value. It must not correspond with a price that is paid later. Typically a vendor has a higher price expectation than a buyer, so price is always a matter of negotiation. The indicator-based patent valuation is the same principle. It takes a set of electronically available data into account and this makes it neutral with respect to a vendors or potential buyer’s interest. Patent value indicators are i.e. the age of a patent, the nature and extend of the patent family or the forward- and backward-citations. 27 different patent- and company-specific value indicators are in use within the IP-BI methodology. These different indicators, that may also impact each other, refer to the reference database of traded patents. Here IPBI has built up an own database for traded patents in the past which is based on several M&A transactions where patents had been manually valued, different patent valuation projects as well as several patent auctions.
The valuation was done for all patent families in the database. The database covers the most relevant 159 countries worldwide. If the patents are owned by a certain company, which has more than there are additional information available like i.e. the IP Efficiency. A set of patents i.e. for a specific technology field or a combination of different companies can be composed to individual sets. For these sets or for a single company analysis the information are are aggregated to a set of company specific IP-related key figures.
The scores “Market Attractiveness”, “Market Coverage”, “Technical Quality”, “Assignee Score”, “Legal Score”, “IP efficiency”, “Total IP Quality”, "IP Efficiency", "Innovation culture", "Diversification Degree" are calculated on a scale from 0 (the worst value) to 100 (the best value).
All data are updated at least twice a year. Then all patents worldwide are valued with the IP-BI Algorithms qualitatively and monetarily on internal high performance computers.
Patent valuation platform
The emposis patent valuation platform is a ready to use tool, that can be directly started in most available browsers (IE, Firefox, Chrome, Safari).
Before you start we recommend to receive a short introduction by one of our experts, because the platform offers many different opportunities and functions. Request here a short introduction into the platform and a demo account if you are keen to test it.
Our business model offer simple pay-per-use options where users buy a certain amount of credits (credit models).
flat fee model
Additionally we offer flat rates where an unlimited number of queries can be performed within a certain period.
patent valuation data
Individual data services
The patent valuation data that are offered are worldwide unique. Customers are Data providers (Business Data, Patent data, financial data) or companies with patent management solutions. Here customers are addressed who decide for internal database solutions, regular data feeds i.e. for their patent management system or who intend to enrich their existing data with additional patent valuation information i.e. to complete a company profile.
Here we offer different models depending on what information is needed. The pricing structure depends on the kind of data delivery (data tests or API-data on request) and the scope/amount of data that is needed (qualitative data, monetary data, time slides etc.). Also we customize specific solutions for certain needs, i.e. if the data must be implemented into an existing infrastructure or certain data feeds i.e. for patent management systems are needed. Please get in touch with us directly and discuss what is most suitable for you.
Is there a public reference database of all patent transactions available?
A public database of all patent transactions is not available: Most transactions are embedded into (confidential) M&A deals where the transaction conditions are not public and so either not the patent values. Also direct patent transactions are normally confidential information because the contracts may include additional aspects, e.g. sale and lease back, payment in stocks or certain payment terms etc.
How is the portfolio value for the chosen company or individual set calculated?
All patents worldwide have been valued by IP-BI. All the patents are directly linked to an owner. All values of all patents that are linked to the same owner are summed up and result in the patent portfolio value of a certain owner (company or natural person). The same with a set of patents: Monetary values are summed up, the qualitative values are an average of the chosen set of families.
Why is there variation in value over the years of a single patent family or a set or families or a company?
The patent values of a company changes over the years due to different reasons:
1. New patents have been filed by the company
2. Patents ceased due to different reasons (age, fees were not paid, litigations etc),
3. Companies or parts were acquired, sold or dissolved,
4. Patents were acquired or sold
5. Each patent family value itself changes from one year to the other. This has very different reasons, i.e. the remaining term is shortened over lifetime (lowering value), the procedural state changes for application to grant or family members are added (increasing value).
What kind of IP can be valued? Are trademarks and design patterns also valued?
Within the emposis database all patent applications, granted patents and utility models are valued. Trademarks, design patterns are not valued within emposis.
How reliable are the calculated values?
As mentioned in the methodology description all calculated values are based on empirical data (reference data). This means that a calculated value range covers exactly the values that have been realized by transfers in the past of similar patents (similar in terms of the indicators that have been extracted by the patent). So the value range is very realistic and the best available approach compared to all other available value determination methodologies. And indictor based method is strong and absolutely tamper proof so the approach is good for a value impression as the value-interval delivers. But of cause it also has its limitations especially when single patents are rated. But the experience shows an extremely good and unrivalled hit rate.
What kind of value is calculated here?
Here, within the indicator method, a fair market value approach (market analogy) is used. It calculates the value of an IP as if it would be a traded good. Here the value is determined exactly for the intended use: to get it traded, if needed (i.e. in terms of M&A, securities, sale and lease back, licensing, liquidation etc.). So the value is very close to a final price determination. The indicator based method for value determination described before follows this approach by referring to prices of traded patent in the past.
What are the advantages compared to other valuation methods?
The indicator-based valuation approach in the emposis database is a market value approach, calculating a potential transfer value if a patent would be traded from one owner to another.
The income approach measures the income that is made or is supposed to be done in the future using a certain patent. This is strongly related to the product portfolio and the market access or reputation a certain company has. So the income approach is assignee-linked. As long as patents are not yet utilized and no income data are available, the approach is very time demanding in terms of data collection and delivers very vague results since all data (shares, market development etc.) have to be estimated.
The cost approach measures the costs that were needed for the invention (including development cost, excluding research cost). But unfortunately invest is not proportional to intellectual outcome. On the other hand a random or side invention may lead to a great success there are many historical examples (i.e. Viagra, Penicillin, Microwave, Xray, vulcanisation of rubber, post-it) – so the cost approach wouldn’t lead to a satisfying result.
How can risks in terms of a wrong calculation be handled?
The method and the implementation were done according to current highest quality standards. So a full FMEA (Failure Mode and Effects Analysis, according to QS9000) has been performed. Different methods to lower risk on the data level, the indicator level and even the value calculation level have been implemented. The algorithm is being trained regularly in order to adjust the value calculation or to improve it. All these measures and the total method itself lead to the most reliable approach for patent valuation so far.