Posts Tagged: "patent valuation"

IP Audits for the Emerging Life Science Company: A Staged and Strategic Approach for Value

The trend is here to stay – large life science companies are basing their growth strategies on research and development happening at early-stage companies. It is easier, and less risky, for large companies simply to acquire these enterprises working on new and innovative therapeutic candidates that have advanced to a certain stage. For early stage life science companies (ESLSCs), intellectual property is the asset. Although 2021 saw what appeared to be a slowdown in deal-making activity compared to 2020, the top M&A and licensing deals were valued at well over $50 billion dollars. Whether to attract the attention of one of the larger players in the space – for a potential license or acquisition, to entice investors, or to remain competitive – a methodical and focused IP review should ensure clear alignment with business objectives and maximum return on investment. Not only does the IP audit provide the ESLSC a chance to broadly inventory and strategically review their IP, it also prepares them for any potential third-party diligence.

A Standard Essential Patent Valuation Perspective on Ericsson v. Samsung

As the battle over the adequate forum for Ericsson v. Samsung continues, the question arises as to how the court will eventually deal with the valuation of the standard essential patents (SEPs) at stake. Here, the U.S. courts are at an advantage. After all, the United States has from the outset illustrated global thought leadership on the valuation of SEPs. Historically, courts have accepted two principal methods to determine the value of SEPs: the Comparable Licenses Approach and the Top Down Approach. These methods have come to be seen as compatible with the Georgia Pacific Criteria, which set out the core valuation principles in the United States and, increasingly so, even beyond U.S. borders.

Quickly Modeling Patent Value

Imagine you are presenting to your boss and requesting approval of a $2 million purchase of four patent families. Already savvy about market prices, she is focused on the impact of the purchase to the business. Her question: “So what are these patents worth and what will the impact be of the purchase?” Unless you have done some sort of valuation to quantify the worth of these patents for the business, you may find yourself talking vaguely about synergies or avoided costs. This is because getting a valuation typically takes time and can be expensive. But what if there was a way to quickly model the worth of the patents to us?

Brokered Patents are Not Junk—and the Reasons will Surprise You

Occasionally, we hear people say, “brokered patents are all junk.” This begs the question, “are operating companies and non-practicing entities (NPEs) spending hundreds of millions of dollars buying junk patents?” Luckily, the short answer is no. We know clients have successfully bought and used brokered patents to substantially alter their licensing and litigation posture at a lower cost than the alternatives. We also know that patents on the brokered market rank higher than average patents. So why this disconnect? We are victims of our own cognitive biases and the behavioral economic traps that make it harder for buyers to find and buy patents… When only a small fraction of what we are looking at is ultimately interesting to us, our brains can trick us. Using a structured decision-making process together with some tools can overcome those biases and allow us to identify and buy the patents that fit our business needs.

Patent Valuation, Discount Rates and the Global IP Index

Suppose you are valuing a large patent portfolio with issued patents and pending applications in more than 20 countries throughout the world. One of your tasks would be to project how much royalties each patent could collect in each of the subject countries over time. After plotting out your expected revenue streams, you would have to apply a discount rate to these projected royalty revenue streams to reflect the risks associated with entering into governing licensing agreements. Which risks are embodied in discount rates (also known as costs of capital)?