My Patent Valuation Tool 3
My Patent Valuation Tool 3
My Patent Valuation Tool 3
(Simple)
By
MyPatent
(www.mypatent.co.za)
Subject to disclaimers
For valuation services using our proprietary comprehensive model, please contact www.zaiplaw.co.za
Dec-08 Year1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
0
Turnover 5,000,000 6,500,000 8,450,000 10,562,500 13,203,125 15,843,750 19,012,500 21,864,375 25,144,031 28,915,636 33,252,981
Royalty payable 200,000 260,000 338,000 422,500 528,125 633,750 760,500 874,575 1,005,761 1,156,625 1,330,119
Tax 58,000 75,400 98,020 122,525 153,156 183,788 220,545 253,627 291,671 335,421 385,735
Profits after tax (life) 142,000 184,600 239,980 299,975 374,969 449,963 539,955 620,948 714,090 0 0
NPV of royalty stream: 1,147,458 Rands (Value) Click here to read our articles on common valuation mistakes
35,000,000
30,000,000
Turnover
0
25,000,000 0
20,000,000
0
0
15,000,000
10,000,000
5,000,000
0
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18
Years
MyPatent, Intangible Consulting (Pty) Ltd, 2007
Approximate values of hurdle rates
Please note that royalties may be spread over a range from 0% to three times the "average royalty" and that the above average roy
rates should only be used to support royalty rates determined using first principles. (see www.zaiplaw.co.za)
Main factors:
1 Strength of IP arsenal
2 Monopoly granted by IP
3 Degree to which IP drives sales / profits
Other factors:
1 the royalties received by the proprietor for the licensing of the IP in suit, proving or tending to prove an established royalty;
2 the rates paid by the licensee for the use of other IP comparable to the IP in suit;
the nature and scope of the licence, as exclusive or non-exclusive; or as restricted or non-restricted in terms of territory or with respect to whom the
3 manufactured product may be sold;
the licensor's established policy and marketing program to maintain his IP monopoly by not licensing others to use the IP or by granting licences under
4 special conditions designed to preserve that monopoly;
the commercial relationship between the licensor and licensee, such as, whether they are competitors in the same territory in the same line of
5 business; or whether they are inventor and promoter;
the effect of selling the protected specialty in promoting sales of other products of the licensee; the existing value of the IP to the licensor as a
6 generator of sales of his non-protected items; and the extent of such derivative or convoyed sales;
7 the duration of the IP and the term of the licence;
8 the established profitability of the product made under the IP; its commercial success; and its current popularity;
9 the utility and advantages of the IP over the old modes or devices, if any, that had been used for working out similar results;
the nature of the protected IP; the character of the commercial embodiment of it as owned and produced by the licensor; and the benefits to those
10 who have used the IP;
11 the extent to which the infringer has made use of the IP; and any evidence probative of the value of that use;
the portion of the profit or of the selling price that may be customary in the particular business or in comparable businesses to allow for the use of the
12 IP or analogous IP;
the portion of the realisable profit that should be credited to the IP as distinguished from non-protected elements, the manufacturing process, business
13 risks, or significant features or improvements added by the infringer;
14 the opinion testimony of qualified experts; and
the amount that a licensor and a licensee would have agreed upon if both had been reasonably and voluntarily trying to reach an agreement; that is,
the amount which a prudent licensee - who desired, as a business proposition, to obtain a licence to manufacture and sell a particular article
embodying the protected IP - would have been willing to pay as a royalty and yet be able to make a reasonable profit and which amount would have
15 been acceptable by a prudent proprietor who was willing to grant a licence.
Georgia-Pacific Corp v United States Plywood Corp