Patent Valuation Mandate for Partial Transfer of Exploitation Rights

Mandate Description

The objective of the mandate was to determine the fair value of a patent relating to an innovative process for the catalytic conversion of organic residues into high-value biomethane.

The patent, resulting from an applied research programme, was intended to be subject to a partial transfer of exploitation rights to a European industrial partner.

The purpose of the valuation was to determine the economic value of the intellectual property in a negotiation context, assess the financial implications of the sharing of exploitation rights, and provide an objective basis for the calculation of future royalty streams.

During the assignment, several legal points of attention were brought to the client’s attention, including the need to verify the exact scope of patent protection in light of similar filings in other European jurisdictions.

Particular attention was also drawn to the importance of clarifying the terms of co-ownership and exploitation of the patent between partners, as well as to the residual duration of protection prior to expiration, which may have a material impact on economic value.

These elements were identified as observations and did not constitute a legal analysis.

Key Issues

The main challenges of the mandate were to promote a technological patent developed within an international partnership framework.

A key objective was to estimate the share of value attributable to the Swiss entity in the context of a partial transfer of exploitation rights.

The valuation also needed to ensure neutrality in order to facilitate constructive dialogue between partners.

Finally, the assignment aimed to establish a robust economic basis to support strategic and contractual discussions.

Approach and Results

The valuation relied on several complementary approaches commonly used in the valuation of intangible assets.

• An income-based approach using the royalty savings method was applied, valuing the patent based on theoretical royalty flows.
• The royalty rate was calculated intrinsically for the company using a formula derived from the Black–Scholes–Merton model, integrating expected cash flow volatility, the residual life of the patent and project-specific risk factors.
• A cost-based approach was also implemented, based on the reconstruction of historical research and development expenditures, validated in coordination with the company’s financial and technical teams.

In addition, a market approach was applied through the analysis of comparable transactions in the field of methanisation and waste recovery technologies.

The analysis resulted in a reliable and well-reasoned valuation range, which served as the basis for negotiations reflected in the Memorandum of Understanding.

The valuation also highlighted several potential future value drivers, including the possible extension of the patent to additional industrial applications.