Patent Valuation Services
Patent value extraction services from GHB Intellect have been derived through direct case experience working with a range of clients. Our broad goal is to provide patent valuation services through Patent Portfolio Analysis and Patent Litigation Support. We then advise each client on how to best leverage the value of their IP portfolios. Specific goals can include an IP audit, IP strategy, IP valuation, IP transaction, or IP due diligence. These specific roles usually depend upon our clients’ individual needs.
In recent years, the IP asset transaction market has grown rapidly. Patents, copyrights, and trademarks define most of the IP transactions. IP asset purchases can strengthen a position during a negotiation, can be used as a risk-mitigation tool, and can be used as investment opportunities. On the other hand, IP asset sales can be a quick way to raise capital and are frequently used to sweeten business deals.
Patent Valuation Support from Start to Finish
If you are considering selling your IP assets, then we can walk you through the very first step to the close of the deal. This includes help marketing those patents and other assets to our network. If you are buying IP assets, then we can help mitigate risk by assessing the patent and identifying its value. This will help to keep the cost as low as possible during the transaction.
Our patent valuation services include evaluating the patent technology, identifying markets and competitors, and assessing legal aspects. From here, we define the valuation model that will result in the most appropriate guidance. Our due diligence methods coupled with our overall science and technology expertise allow us to ensure a patent valuation at a fair market value.
The Importance of Intellectual Property
Intellectual Property (IP) is a crucial portion of a company’s assets. A strong IP portfolio is instrumental for; fundraising, leverage in business transactions, an exit strategy, M&A valuation. Additionally, having a strong collection of IP provides confidence and relative freedom to operate (FTO). The IP transaction market has grown rapidly, due primarily to the boom in new patents. GHB Intellect Patent Valuation Services have expanded rapidly in recent years as demand for our expertise has continued to grow.
Patent Valuation Applications
Patent valuation services have become a major discipline to determine what that patent or a patent portfolio is worth. The principles of sound patent valuation services are important to ensuring positive asset transaction outcomes. We have outlined the types of IP valuation applications in the following subsections.
Mergers and Acquisitions
Portfolio strength and Freedom-to-Operate (FTO) have a huge impact on acquisition totals. There are varying discount rates between 10-30%. This could change the valuation of a company significantly.
A strong IP portfolio greatly contributes to a successful IPO. Many business valuation professionals rely heavily on input based on the health of the IP and the valuation of the IP portfolio.
As industries mature, older players benefit tremendously from licensing. A valued portfolio provides leverage in cross licensing portfolios. For example: Intel licenses AMD patents for $1 billion.
Investors always look to IP health of early stage companies. A valued IP portfolio strongly enhances the likelihood of successful fundraising.
Strategic players always on the lookout for strong patents. Large corporations look closely at the strength of patent portfolio before investing. The role of FTO opinion is crucial in any partnership.
IP itself has developed into a market. Whopping transactions in recent decades have occurred through direct and indirect bidding. Nortel, Motorola Mobility, and Eastman Kodak are good examples.
Patent valuation services should allow valued portfolios to become much more easily liquidated. In some cases, the value of patents is greater than that of the company itself (e.g. Nortel).
Philosophy: Patents as Assets
Patents have grown from more fancy and honorary to all-out financial assets. Even though patent sales have been around for more than a century, recent decades have created their own market. This is partly due to the increasing economic abstraction of value. Abstraction of business started a long time ago for several reasons. The more abstract a line of business is, you can expect it to be more; sophisticated in its methods, hidden from laymen, profitable, and scalable. But, that also comes with more risk.
Commoditization of the IP market is increasing because old markets are constantly commoditized to be replaced by new markets. For example, when the chip market moved towards systems, IBM was the leader. Then, the systems market transformed into the software market and Microsoft commoditized it. Next, Google benefited when the software market changed to intelligence, ads and services. Finally, we now see Non-Practicing Entities (NPEs) further commoditizing as the ads and services market evolve into ideas and patents.
Abstraction is inevitable and everyone is trying to commoditize others. A result of this can be seen in the vertical integration of which all tech giants are excellent examples. Before you are commoditized by someone else, you must invent into your next business level.
Patent Sale Examples
Henry Woodward was a Canadian medical student developing devices for medical field. He was the inventor the electric light patent filed in 1874. Thomas Edison bought the patent along with many others. This transaction took place some 150 years ago, when Edison, in pursuit of rights to the electric light, bought Woodward’s patent in this field.
75 years later, on August 11, 1942, Hollywood darling Hedy Lamarr (actress by day, inventor by night) co-invented frequency-hopping, the basis of all of today’s communications. Eventually sold this patent to Bell Labs. As you can see, the commoditization of IP is nothing new. In fact, it has been one of the most important drivers of commercialization of innovation and has significantly impacted the technologies made available to consumers.
Patent valuation plays an important role in this system. Many different methods can be used to value intellectual property. Please contact us if you have any further questions about our patent valuation services. Or, read more about our IP valuation methods for a closer look at how we perform them.