26/28/04/2014 – Valuation of Patents HG Principles of IP Valuation Heinz Goddar Boehmert & Boehmert

26/28/04/2014 – Valuation of Patents HG IPR Valuation Methods n Cost Approach n Market Approach u Comparison with relevant “deals” n Yield Approach

26/28/04/2014 – Valuation of Patents HG Yield Approach n Similar to employees’ invention remuneration in Germany n Methods used for employees’ inventions u License analogy u Savings u Free estimation n NPV determination similar to lump-sum invention remuneration

26/28/04/2014 – Valuation of Patents HG License Analogy n Royalty Rate n Royalty Base n NPV determination

26/28/04/2014 – Valuation of Patents HG NPV Determination n Time and extent of expected use u Life time of patent u Expected turn over u Business Plan n Pension formula for determination of NPV

26/28/04/2014 – Valuation of Patents HG “Pension Formula“ for NPV C 1 C 2 C ty NPV = C r (1 + r) 2 (1 + r) ty wherein C 0 is the royalty cash flow in the starting year, C 1 in the first year thereafter, and so on, until C ty means the royalty stream in the terminal year of (patent) protected sales. Furthermore, r is the discount rate to be applied, i. e. the average bank interest rate for lending money to be applied, e.g. 10% interest means r = 0.1.