IP Evaluation for patent

IP Evaluation does not give a value in monetary terms, instead it gives each patent a score. The higher the score, the higher the value of the patent to your business.

The tool can be used for both applications and issued patents, which are both called patents in this tool.

Preparatory work towards setting a price

If your business is relatively inexperienced with valuation you can still use the tool, as it leads you through a number of relevant considerations which you should make when trading rights. The tool focuses on the general opportunities and risks that are associated with the right, and by asking about specific factors that may affect the value of the right, it gives you an insight into the right?s particular strengths and weaknesses. IP Evaluation is considered to be a preparatory task for the meeting with your IP consultant, in which you can go through the results and find the correct price for your specific right together.


Do you plan to hold the score that this tool will provide you with up against other scores?


Do you use this tool because you plan to trade the patent?


Questions and answer responses

The tool consists of ten questions, which all contribute to creating an overview of the patent's value. The general subjects covered are the risks linked to the patent and the patent's potential:

  1. Competing technologies
  2. Strength/validity
  3. The right to produce and sell/use
  4. The scope of the areas of application
  5. Geographic coverage
  6. Development stage
  7. Financial benefits
  8. Lifespan
  9. The size of the market
  10. Growth in the market

The questions have been carefully selected and based on the existing theory and research within the area of valuation.

For each of the 10 questions, there are eight responses for you to choose between. Each answer is linked to a score from 1 to 8 points. You should be aware that the extremes 1 and 8 are only awarded to patents that are extremely weak or extremely strong on the relevant factors and thus perform outside standard norms. In this way, you can differentiate between the highly valuable and the generally valuable patents.

Several of the responses are subjective. For example, you have to answer whether an amount is small or large, which is where it is important to set amount intervals to use when evaluating all the company's patents in order to ensure consistency if the scores are to be compared later.

Be honest and realistic when you answer the questions, otherwise the tool will not generate a useable result.

Information about the patent which is requested evaluated




Has the value been evaluated prior by this method? If so, state the score and date for such prior evaluation


It is important to set up a working group

Typically, a different value will be attached to a patent depending on the person who is to quantify or describe the value. It is therefore important to select the same persons to work with this model, when a business wishes to estimate the value of a patent. Similarly, it is essential that all relevant stakeholders form part of the working group, who is intended to work with the model. A list of potential stakeholders may include the following, but is not limited to: the Marketing department, Management & Strategy, R & D department and the IPR department.

The working group should take notes in order that the whole process is documented. Thus a third party will get a better understanding of the result of the model, and it will be easier to trace prior results and, if needed, to continue working with them.

A chairman for the working group must be appointed. The chairman is responsible for implementing the evaluation.

A notetaker must also be appointed. It is the notetaker's responsibility to take notes during all discussions, and to see to it that all historical data are included. Such notes should subsequently be copied to the note fields of the model.

All members of the working group are recommended either to help one another in completing the model or to complete it individually, upon which the results should be compared and discussed. This leads to a good dialogue and matching of expectations in between the departments, and thus a more reliable resultat.

Below you can enter the members of the working group. Note that setting up a small group is highly recommended. The number of group members depend on your organisation.

1. Are there alternatives to the patented invention?

You should answer the extent to which the patented invention can be substituted. In order to do this, you should first consider the alternatives that exist.

The more difficult your invention is to substitute, the higher its value. You should be aware that even if no alternatives exist for your patent at the current time, these may appear during development, and you should therefore calculate this risk into your answer.

How would you assess the market for your technology?

1 point: My patent?s technology can be substituted extremely easily
...
8 points: My patent?s technology is very difficult to substitute


In your opinion, which measures can be taken in your specific situation to improve this score?

See possible suggestions here

Below please state your thoughts, discussions, background, reservations etc. which have influenced the rating so that others can gain insight into the factors contributing to the value of the patent.

Alternatives:

An alternative to your patent is an invention that solves the same problem as your patent.

How many inventions ? patented or unpatented ? you choose to consider as substitutes, depends on your patent and the context in which you find yourself. The following are examples of what can constitute an alternative.

Example 1

You have developed a new mechanism for doing up a shoe, essentially Velcro. Velcro stands out, for example, because it is easier for children to do up than traditional fastening mechanisms such as laces and zips. Your patented invention is therefore easily substitutable if your customer group consists of people who can use laces, although it is more difficult to substitute if your customer group consists of children.

Example 2

You have developed a new chemical substance for use in headache tablets. The substance is unique because it produces fewer side effects for the consumer. Your patented invention is therefore easy to substitute if your customer group consists of all consumers, although it is more difficult to substitute if your customer group consists of people who are intolerant to the known medicines to combat headaches, but who can tolerate your pill due to the reduced side effects from your chemical substance.

2. Is your patent valid?

The validity of a patent is its ability to withstand attempts to invalidate it.

The probability of a patent being declared invalid if it is challenged reduces its value. A challenge can take place, for example, by objection, administration re-examination, legal proceedings or appeal cases. The options for challenging a patent vary from country to country and the same applies to the financial risk linked to such a challenge.

Challenges to the patent in other countries in which it is valid also affect the patent?s value. You should therefore investigate whether the patent has been challenged in one or more countries previously. If this is the case, you should analyse the result of this case and assess whether this has any effect on the validity of your patent.

The validity of the patent can thus be assessed from the points scale below:

1 point: My invention is still in the application phase
3 points: My patent has been issued
6 points: My issued patent in is force after challenges through the administrative system
8 points: My issued patent in is force after challenges through the legal system

If you are aware of information about the history of your patent that may affect the validity of your patent in one direction or other, you can use an intermediate score of 2, 4, 5 or 7. Write your justification in the notes field below.


In your opinion, which measures can be taken in your specific situation to improve this score?

See possible suggestions here

Below please state your thoughts, discussions, background, reservations etc. which have influenced the rating so that others can gain insight into the factors contributing to the value of the patent.

Patent applications

Patent applications will have a greater probability of being invalidated than patents already issued, as the application can be rejected by the patent authorities.

New vs. old patents

The risk of the patent subsequently being declared invalid is greatest in the first year.

How can a patent be challanged?

A patent can be challenged via several channels. These can be divided into two groups:

- Challenges through the administrative system, such as objections, administrative re-examination and appeals resulting from this

- Challenges through the legal system in the form of court cases

3. Will permits/licences need to be obtained before the invention described in the patent can be used?

If the invention will form part of a greater context, e.g. as a component in a product, it is important to investigate whether you have the right to develop the rest of the product, in other words, whether there are other parties with proprietary rights over components you need to use in connection with your development of the finished product.

If you do not have the rights to all components in the product and if there is a high risk linked to obtaining these rights, the value of the patent is reduced until these rights have been obtained.

How would you assess your patent?

1 point: I do not have all rights to all parts in the product at the current time, and these are extremely difficult to obtain OR I am not able investigate whether I have all rights to all parts of the product.
...
8 points: I have all rights to all parts of the product


In your opinion, which measures can be taken in your specific situation to improve this score?

See possible suggestions here

Below please state your thoughts, discussions, background, reservations etc. which have influenced the rating so that others can gain insight into the factors contributing to the value of the patent.

Which rights does a patent give you?

A patent does not give an automatic right to produce, use and sell that which is described in the patent document. The patent ensures your right to control who is producing, using and selling that which is described in the patent document. The difference may not sound great, but in practice it means that other patent owners can prevent you from producing, using and selling their inventions, if they have a patent describing an invention that you need to use in connection with your product.

4. How wide is the area of application for the patent?

Consider how your patent may be used in connection with other products or industries than the primary ones.

Consider all options carefully so you know of all alternative uses for your patent. You must not allow yourself to be limited by what is possible for your business to produce or commercialise. In order to exploit all areas, it may be necessary to grant a licence of right for the invention within one or more areas. This will typically happen if you are not interested in expanding into industries in which, for example, you have no established manufacturing or sales channels. You should therefore only make a decision on whether alternative areas of application exist and not whether or not you have considered exploiting these alternative areas of application.

How do you assess your patent?

1 point: There are few or no alternative areas of application for my patent
...
8 points: There are a lot of alternative areas of application for my patent


In your opinion, which measures can be taken in your specific situation to improve this score?

See possible suggestions here

Below please state your thoughts, discussions, background, reservations etc. which have influenced the rating so that others can gain insight into the factors contributing to the value of the patent.

Examples of primary industries and other industries:

A bicycle tube manufacturer has developed and patented a new valve for use on its tubes in order to differentiate itself from its competitors. At a conference, the tube manufacturer finds themself in conversation with a foodstuff consultant. The tube manufacturer talks about their new patented valve which the foodstuff consultant finds extremely exciting as he believes that it would also give significant benefit in producing packaging for foodstuffs, and he thinks that the valve could also be used in other products such as car tyres, inflatable mattresses, etc.

Primary industries:

The primary industry here would be the bicycle tube industry as it is for this that the valve has been invented, it is also the bicycle manufacturer?s core industry.

Other industries:

Other industries in which the invention can also be used are the packaging producing industry and other industries in which valves are used, such as the manufacture of inflatable mattresses, car tyres and swimming rings.

5. Have you applied for patent protection for your invention in all relevant countries?

It is important that your patent covers all relevant countries. Which countries are relevant for you, depends on the strategy for your patent. If your patent is still in the application phase, it is important that all relevant countries are listed, and if not, to do so if it is still possible. If you are waiting for the result of a challenge in one or several countries, you should consider the patent to be in force until proven otherwise.

Consider whether your patent covers all relevant countries.

The scoring scale for patent applications is as follows:
1 point: Not all relevant countries are listed
8 points: All relevant countries are listed, or this can still be done

The scoring scale for issued patents is as follows:
1 point: The patent issued covers few or no relevant countries
...
8 points: The patent issued covers all relevant countries


In your opinion, which measures can be taken in your specific situation to improve this score?

See possible suggestions here

Below please state your thoughts, discussions, background, reservations etc. which have influenced the rating so that others can gain insight into the factors contributing to the value of the patent.

Where is the patent valid?

Patents are only valid in the country in which they are issued. This means that a patent issued in Europe and the USA does not cover countries in which a patent has not been issued, e.g. China. Therefore, businesses can legally manufacture and sell the invention in China, as long as they do not export to countries where the patent is in force.

Relevant countries

The relevant countries may include countries in which your business is financially active, or in which you expect it to be financially active in the future, or countries in which your competitors are financially active, as well as countries in which you expect them to be financially active in the future. This may, for example, relate to producer markets, sales markets as well as import and export markets.

6. To what extent does the invention require further development before it can be used?

It often takes a long time to mature a patent for commercialisation or use. You should judge, how much more time is required before your product/invention is ready for marketing. If there is still a long way to go, your patent will typically be worth less than if it were tested and ready to be commercialised/used.

1 point: The invention/product needs a lot of further development before it can be used
...
8 points: The invention/product does not need further development before it can be used


In your opinion, which measures can be taken in your specific situation to improve this score?

See possible suggestions here

Below please state your thoughts, discussions, background, reservations etc. which have influenced the rating so that others can gain insight into the factors contributing to the value of the patent.

7. How much of a financial benefit does the patent constitute?

Your patent gives you a financial benefit in relation to the next best alternative invention. This benefit can either consist of increased earnings due to a higher price for the end product or a cost saving in relation to the next best invention that solves the same problem as your patent. The financial benefit does not consist of a potentially greater market share than the next best invention.

1 point: The financial benefit from your invention is extremely small in relation to the next best alternative invention
...
8 points: The financial benefit from your invention is extremely high in relation to the next best alternative invention


In your opinion, which measures can be taken in your specific situation to improve this score?

See possible suggestions here

Below please state your thoughts, discussions, background, reservations etc. which have influenced the rating so that others can gain insight into the factors contributing to the value of the patent.

The next best invention

The next best invention may be owned by you or by your competitor. In some cases, your invention will be used in several different products, which means that there can also be several different next best inventions ? one for each product in which the invention is included. If this is the case, you should consider the average financial benefit.

Example 1

If your patent covers a new chemical substance for headache tablets which gives fewer side effects than other known alternative substances, the next best alternative will most likely be the existing substance that will be replaced by your new substance. Assume that your business strategy is to sell to the whole market, both the consumers that do not suffer side effects and the consumers that do suffer side effects.

If there are few consumers who suffer side effects, it may be argued that the new substance constitutes a very small or small financial advantage. The new substance does not increase the price of the headache pills noticeably, as your customers are not willing to pay extra for your pills as they do not experience an improvement in quality.

However, if the majority of consumers suffer side effects from these traditional tablets and are therefore willing to pay a price that is 50% more than that for the traditional tablets, the patent can be said to constitute a large or very large financial benefit in relation to the next best alternative.

Example 2

If your patent covers the technology behind Velcro, which is used to attach two surfaces, which should be repeatedly fastened and unfastened, there are several next best alternatives as there are still several areas of application. Next best alternatives could be tape, glue, laces, zips, etc. depending on the use. Velcro is used in many products and has also won a large market share, but as a general rule, Velcro does not contribute any large percentile increase in earnings per product in relation to the next best alternative invention, which means that the financial benefit is small.

8. For how many years can you expect to be able to use the patent?

If you use the model for an application, you should assume that the patent will be issued on the basis of this application for the purposes of this question.

You must first calculate the remaining lifespan for the patent. This is done by calculating the three lifespans below, and then the shortest lifespan is selected, as this is the maximum number of years the patent will have a justification for existence. An assessment is then made as to whether this is a long or short time in the specific context in which you are acting.

a. Remaining patent protection period

b. The expected time until your competitor has designed around your patent so that it is superseded

c. The expected lifespan of the product, the patent is used in connection with

How would you assess your patent?

1 point: I expect to be able to use the patent for an extremely short number of years
...
8 points: I expect to be able to use the patent for an extremely long number of years


In your opinion, which measures can be taken in your specific situation to improve this score?

See possible suggestions here

Below please state your thoughts, discussions, background, reservations etc. which have influenced the rating so that others can gain insight into the factors contributing to the value of the patent.

Ad a) Example of remaining patent protection period:

The remaining protection period for the patent is the maximum number of years that you can maintain protection from the patent authority from the current date. The maximum patent protection period in most countries is up to 20 years from the submission date in the applicable country. If the patent was submitted three years ago, and the maximum protection period is 20 years, the remaining patent protection period will therefore be 17 years.

Ad b) Examples of the expected time until your patent is circumvented

There may be other players in the market who develop an alternative technology which means that your patent is superceded. The expected number of years until your competitor circumvents your patent by discovering an alternative technology is estimated based on previous experiences.

Ad c) Example of the expected lifespan of the product

The technology in the patent typically forms part of a larger product, which means that it is just as important to consider the lifespan of the product. If the patent forms part of several products, the lifespan should be considered for each of these products. In such cases, the lifespan of the product with the longest lifespan is selected, as the patent can still be justified as long as it forms a part of at least one product on the market. Please note that it is not necessarily your own product, but the patent may still have a justification if it is used in other products via licensing.

9. How large is the market for your invention?

If your patent relates to a new product, you should carry out a thorough market analysis before you answer this question. This market analysis should look more closely at supply and demand in each individual market (geographic, industry-specific, consumer segments, etc.).

You may already know the market, but still carry out an updated analysis and place specific focus on alternative and supplementary exploitation areas that may contribute to expanding the size of the market for your patent.

If your current market consists of your local market, it is important to determine how large the total global market is estimated to be.

You should ensure that you do not calculate your own market share of the market, but instead assess the whole market as this can be seen as an option for the patent. You should however, carry out a realistic assessment of the market.

How would you assess the market for your patent?

1 point: The market for the patent is extremely small
...
8 points: The market for the patent is extremely large


In your opinion, which measures can be taken in your specific situation to improve this score?

See possible suggestions here

Below please state your thoughts, discussions, background, reservations etc. which have influenced the rating so that others can gain insight into the factors contributing to the value of the patent.

Example: Realistic assessment

Your patent is used in connection with one product, basically hair dye. You should exclusively address the B2C market. You can regard the market here as everyone with hair, but this assumption would be excessive. Instead, a realistic assessment could be carried out by looking at your own and the competitors' market, or by carrying out consumer surveys that find out about the consumer's use of hair dye in general, and therefore not your hair dye in particular. This will give you a picture of the number of products sold globally, the numbers of users, or another useable measurement of how large the market really is.

10. What is the growth rate in the market?

Investigate the expected growth on the market. If the patent covers several markets, you will have to carry out an average reflection of the growth, as considered from the significance of the individual market.

How would you assess the growth in your market?

1 point: The growth rate in the market is extremely low
...
8 points: The growth rate in the market is extremely high


In your opinion, which measures can be taken in your specific situation to improve this score?

See possible suggestions here


Below please state your thoughts, discussions, background, reservations etc. which have influenced the rating so that others can gain insight into the factors contributing to the value of the patent.

Rapport

Warning

You have chosen to retain the score of 1 for one or more questions.

You should consider whether the specific factors are so critical that they deduct all value from the patent. This could be, for example, that your competitor has a blocking patent which means you cannot obtain full user rights for the complete product.

Factors for which you have given a score of one:

Do you find one or more of these factors so critical that they devalue your patent?

State the reason for your selection

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