Top Industries for Patent Valuation in 2024
The market for patent valuation services is likely to expand at a compound annual growth rate (CAGR) of 14.8% from 2024 to 2034. The patent analytics market is estimated to reach US$ 6573.3 million by 2034. Also the patent analytics market will reach US$ 1715.8 million in 2024. So the patent valuation market is projected to grow from an estimated $1715.8 million in 2024 to $6570.3 million by 2034.
When businesses use these services, they can better assess the market potential, competitive positioning, technical relevance, and patent value, which in turn helps them make better licensing, acquisition, and partnership decisions.
This article aims to help you in identifying top industries for patent valuation and how to handle the challenges associated with it using a robust patent valuation platform.
What is patent valuation ?
A firm must have a precise idea of the value of its smart patent portfolio when it intends to sell, license, or otherwise profit from it. Patent valuation is an intricate and subjective process.
If you need to estimate a base cash value or damage appraisal in the event of infringement discovery, one of the most frequent approaches is the Market technique. However, the kind of patent transaction greatly determines the technique utilized.
Many things go into figuring out a patent’s value, like how much a car, phone, or house is worth on the market. These things include the cost of labor, the cost of overhead, the uniqueness of the product, and the competitor’s position.
There are several ways to determine how much a patent is worth. These include
- The Cost Approach,
- The Income Approach and
- The Market Approach.
Patent Trends in 2024
2024 is going to be a year of exploration for every industry. The top industries for patent valuation will also go through the following trends in the coming days.
AI-Powered Growth
With a predicted yearly rise of a spectacular CAGR from 2024 to 2031, the Intellectual Property Services Market will continue to experience tremendous expansion. In 2021, the market was worth USD 2594.78 million. 2027, it’s projected to be worth USD 5207.62 million, thanks to a CAGR of 12.31%.
However, such tremendous expansion is insufficient to keep up with the dynamic nature of creation. Last year, the WIPO received 3.5 million patent applications, a record.
Intersecting the Real and Virtual Worlds
There will likely be a lot of movement in the VR patent environment in 2024. When Sony successfully patented their revolutionary VR Metaverse headgear in 2023, it started a patent trend for virtual reality (VR), particularly in the Metaverse category.
Even though the market is still weak, there will likely be many more patents and rights related to AR and VR shortly. The AR, VR, and MR market will likely grow from $30.7 billion to $300 billion by 2024.
IP Management Data Analytics
By 2024, data management will have become integral to nearly every sector. Forbes reports that every day, the globe generates 2.5 quintillion bytes of data, which have the potential to serve as a roadmap for creators and innovators. Thus, companies must include AI in IP management to sift through data quickly.
Intellectual property and sustainability
According to patent trends, eco-sustainability is becoming more important, especially in the retail, commercial, and automotive sectors. However, customers have been pressuring brands to become more environmentally friendly for some time now.
Sustainable technologies are evolving due to environmental concerns and commercial demand for eco-friendly solutions. Businesses’ increasing dedication to addressing climate change indicates this trend. By 2025, there will have been a 60% spike in green patent applications.
Patent Management Automation
By simplifying procedures, increasing productivity, and decreasing the likelihood of mistakes, automation will transform the IP management scene in 2024. AI and machine learning algorithms can evaluate massive volumes of data, speeding patent search and submission.
Additionally, automation systems can help with IP rights enforcement and monitoring by identifying possible infringements faster than manual processes. Smart contracts driven by blockchain can also automate licensing deals, ensuring that trades are clear and safe. Consequently, firms should anticipate easier administration of their IP portfolios, quicker decision-making, and less administrative constraints.
Top 5 Industries Leading the Patent Valuation Charge in 2024
In 2024, several sectors are leading the way in patent innovation, helping to progress their businesses and solidify their positions through strong intellectual property. Let us take a look at some of these growing areas:
Artificial Intelligence (AI)
In 2024, there is still a lot of curiosity about how Artificial Intelligence (AI) will change patent valuation. A major issue is the need for high-quality training data, even if AI-driven engines have greatly updated many parts of the conventional valuation method due to their capacity to analyze massive amounts of data about patents.
AI could make a big difference in IP this year by making claim charts, which are a valuable and time-consuming part of figuring out how much a patent is worth and completing deals.
Meanwhile, the industry wants performance criteria to assess AI-based patent valuation engines and safe systems for maintaining and learning from transaction-related information.
Biotechnology
In the biotech industry, novel patented medicinal goods or diagnostics are frequently the catalyst for the signing of many accords. Patents like these are essential for protecting IP and getting a return on investment. Product development is expensive and takes a long time. Thus, it’s common practice to evaluate a potential partner’s IP position during negotiations thoroughly.
The total amount of patents filed or granted is not the only metric. It all comes down to how strong and reliable a company’s patent portfolio is. A strong IP position assures the readiness of the underlying technology for due diligence by prospective partners.
Semiconductors
As with any sector, the semiconductor industry has long recognized the importance of intellectual property and that many companies have varying IP protection needs. Traditional patent strategies sometimes involve patenting ideas at the bottom of a semiconductor company’s stack.
Devices that improve transistor functioning would receive patents. Protecting the company’s core innovations in this way is a win-win. Companies should think about solutions at the application level that are industry-specific. The ensuing patents may prove beneficial and advantageous when representing clients.
Using application-level patents, semiconductor businesses may protect their customers and increase joint venture revenue. The cases involving other industries will likely rise if semiconductor companies collaborate with their customers.
Telecommunications (5G and Beyond)
While deciding how much a telecom asset is worth, investors may prioritize various aspects of the asset. A return on investment is usually their primary goal. You need a bird’ s-eye view of the company, its growth prospects, competitive landscape, and client demographics. An investor’s patent valuation framework does not correspond to a fair market value.
When using an M&A valuation, users should consider potential outcomes and their sensitivity to them, including the best-case and worst-case scenarios. M&A valuation users may be more tech-savvy and care less about following regulations. The value would consider costs or care benefits unique to the person buying the network. It is also possible to factor in the buyer’s debt finance condition while studying.
Internet of Things (IoT)
Businesses are becoming more aware of how the Internet of Things (IoT) can help them be more efficient and reduce risk by connecting gadgets and sharing information and ideas in real-time.
5G and other standards enable interoperability, enabling devices to communicate in real-time. Patents often protect these standards; anyone can obtain them if they follow fair, sensible, and non-discriminatory rules. Companies that use or intend to use IoT technology may require a tailored patent licensing plan.
As implementers move into the IoT world, legal rules and best practices help them figure out how to license patents. IoT benefits go beyond mere technology. It brings new business models, optimizes service operations, and improves product development, production, and procedures.
Factors Driving Patent Valuation in These Top Industries
A few factors influence patent valuation in the industries mentioned above. Let’s look at them here.
- Increased R&D Investment: Research and development (R&D) spending is a big factor in how much a patent is worth. Companies with a strong commitment to R&D often have extensive patent portfolios. Patent value increases when money is invested in new technologies, clinical studies, and scientific discoveries. Potentially valuable patents are directly proportional to a company’s investment in R&D.
- Convergence of Technologies: Innovations arise when different sectors of the economy and different types of technology combine. Patents that combine many technologies or span various fields are worth a considerable penny. Patents about renewable energy solutions, artificial intelligence (AI) for healthcare, and blockchain for supply chain management are leading the pack.
- Global Market Expansion: It is important for companies looking to expand into foreign markets to get patents worldwide. With a solid portfolio of patents, you may easily enter new markets, safeguard yourself against infringement, and strengthen your hand in negotiations for international partnerships.
- Strategic Patent Portfolio Management: Quantity isn’t everything; quality is what counts. One must first determine which jurisdictions are appropriate to file a patent successfully. Portfolio optimization involves continually evaluating and reducing holdings to concentrate on high-value assets.
Challenges of patent valuation
Patent valuation is a challenging task; many challenges crop up along the way. Let’s examine these challenges one by one:
- Subjectivity: There is a problem with subjectivity in patent value since different people have different opinions and understandings of the inventions. Due to inherent bias in the evaluation process, various experts may place varying valuations on identical patents.
- Lack of Market Data: It isn’t always easy to get your hands on reliable market data to value a patent. Negligible data makes objectively determining a patent’s value difficult. As a solution, researchers and practitioners frequently use proxy data or similar transactions to estimate value.
- Legal and Regulatory Factors: Legal issues, like the chance of copyright infringement and lawsuits, affect value. Patents are worth more or less depending on how certain investors are about potential court decisions. The solution is for patent valuation specialists to work with attorneys to handle any complex legal issues.
- Innovation and Technology Dynamics: It is challenging to anticipate the future significance of a patent due to the rapid pace of technical changes. This is an issue related to innovation and technology dynamics. A patent’s value might change drastically throughout the years.
- Patent Quality and Validity: Not every patent is legitimate or high-quality. The impact of assigning value to invalid or weak patents is that it can skew the overall evaluation of a portfolio. The only way to guarantee correct valuation is through thorough quality evaluations and validation tests.
Choose Eqvista for your patent valuation in 2024
Eqvista’s patent valuation can help you determine their true market value if you own patents or portfolios. This procedure is vital when negotiating deals like sales, mergers, acquisitions, or patent licensing.
Accurately recording the value of patents is essential for investors and companies, so with Eqvista’s patent valuation, there is less room for last-minute negotiation anxieties.
How? Let’s find out.
How can Eqvista help in patent valuation?
Here are a few proven ways Eqvista patent valuation can help you with insights analysis.
- Asset Tracking – Eqvista offers an effective platform for efficiently managing patent assets. It means keeping an up-to-date list of patents, monitoring their state, and meeting renewal dates. Eqvista’s patent valuation is simple for companies to catalog their patents, monitor their status over time, and determine the state of their IP.
- Equity Distribution – Eqvista can aid with shareholder equity management. Part of this process is dividing ownership stakes according to various patent contributions. The equity management solutions provided by Eqvista enable firms to precisely assign ownership rights to relevant individuals such as inventors, investors, and others.
- Investor Reporting – Eqvista’s patent valuation simplifies the investor reporting for startups and businesses looking to raise capital. It gives a complete picture of the patent portfolio’s worth, growth ability, and probable risks involved. Also Eqvista’s patent valuationn gives investors the view of patents’ price, legal standing, and strategic significance, among other details.
- Scenario Analysis – For patent value, Eqvista is a useful tool for scenario-based evaluations. To learn how changes (including changes in the market, licensing agreements, or the results of litigation) affect patent value, companies can simulate various scenarios. With Eqvista’s scenario analysis tools, you can make educated decisions by estimating future income streams, analyzing licensing options, and weighing possible risks.
Use Eqvista’s Patent Valuation Services Today!
The patent system facilitates the sharing of technological expertise by allowing several parties to agree to utilize one another’s patented innovations in return for rights to their own.
Having a strategic patent portfolio—which includes granted patents that greatly protect the start-valued up’s products or services—may be of great interest to a major business looking to fortify its patent position compared to another large firm.
To help you with the valuation of your company’s patent, Eqvista has assembled a team of specialists. Sign up for a free consultation by filling out this form.