Patent Monetization - Practical Strategies for Latin America

This presentation focused on the financial valuation aspect of the three monetization alternatives defined in the previous analysis of Novelcoat technology and its market potential (which included patent analytics, risk assessment-business opportunity, and SWOT analysis). These alternatives are: transfer (sale) to Alpha Medical, transfer (sale) to Beta Surgical and licensing to Gamma Stents.

As a preamble to the presentation of methods for financial valuation of technologies protected by intellectual property rights (“IP”), some fundamental concepts to be considered in this type of valuation were explained.

The first concept explained was the modalities by which IP assets create economic/financial value. These modalities include: exclusivity value, non-exclusivity value, defensive value/ freedom to operate, optional value and exchange value. It is of critical importance, at the beginning of a valuation exercise, to understand the modality (s) by which (s) the PI asset creates value since this can be a determining factor for the selection of the asset. most appropriate valuation method for the particular case.

The second concept explained was the value premise. The financial value of all IP assets is specific to the situation under consideration. That is, an IP asset may have different financial values ​​depending on the context in which its use is being contemplated. The premise of value is the definition of the context applicable to the valuation exercise in the specific case under consideration. This “context” can be defined with reference to factors such as: the spectrum of IP rights granted in the transaction, the economic / financial / operational characteristics of the buyer or potential user of the IP in question, the next best alternative of the seller and the buyer’s It is also of critical importance, at the beginning of a valuation exercise, to define the premise of appropriate value in view of the contemplated transaction since this may be a determining factor for the selection of the most appropriate valuation method for that transaction.

The presentation continued with the explanation of the three commonly used methods for the financial valuation of IP assets: cost, market and income. It was emphasized that these methods are useful for calculating theoretically “sensible” or “ideal” values, but that in practice – that is, in negotiations that occur in “the real world” – the agreed values ​​do not always correspond to theoretically “sensible” values “Or” suitable. “A host of factors can contribute to the fact that the value agreed upon in a transaction differs considerably from the methodologically” correct “value.

For the analysis of monetization alternatives relevant to Novelcoat technology, the income method is the most appropriate given the undisputed and preponderant role that this technology has to play in generating income for those who exploit it commercially in the future. The revenue method defines “financial value” as the net present value (NPV) of the flow of future earnings attributable to the IP. This method is based on the discounted cash flow technique, or “DCF,” which is usually used for multiple types of valuation analysis under the principles of modern finance theory. The rationale for such a definition of “value” is the following: in a transaction in a full-fledged context, the buying party must be willing to acquire IP for a price that represents a certain portion of its future profits attributable to the use of IP. Implementation of the income method under the DCF technique requires estimation of three key parameters: annual amounts of the expected future earnings flow, duration of the expected earnings flow and risk associated with realizing the expected earnings flow.


Speakers: Alejandro Loynaz, David Tenenbaum

Moderator: Carlos R. Olarte


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