---
name: Patent Valuation
slug: patent-valuation
category: AI Engineering
description: Patent Valuation provides frameworks for estimating patent value using cost, market, and income methods. Use it for IP valuation, royalty calculations, and patent strength assessment; infringement analysis and litigation work are out of scope.
github: "https://github.com/revfactory/harness-100/tree/main/en/100-ip-portfolio/.claude/skills/patent-valuation"
stars: 1224
forks: 427
install: "npx degit https://github.com/revfactory/harness-100/tree/main/en/100-ip-portfolio/.claude/skills/patent-valuation ~/.claude/skills/patent-valuation"
installs_to: ~/.claude/skills/patent-valuation
source_path: en/100-ip-portfolio/.claude/skills/patent-valuation/skill.md
collection_size: 51
category_size: 2451
collection_url: "https://dirskills.com/collections/revfactory/harness-100"
added: 2026-08-12T04:43:23.510Z
last_synced: 2026-08-12T04:43:23.510Z
canonical_url: "https://dirskills.com/skills/patent-valuation"
---

# Patent Valuation

Patent Valuation provides frameworks for estimating patent value using cost, market, and income methods. Use it for IP valuation, royalty calculations, and patent strength assessment; infringement analysis and litigation work are out of scope.

**Install:**

```bash
npx degit https://github.com/revfactory/harness-100/tree/main/en/100-ip-portfolio/.claude/skills/patent-valuation ~/.claude/skills/patent-valuation
```

## README

# Patent Valuation — Patent Value Assessment

Enhances the IP valuation capabilities of the ip-analyst and license-strategist agents.

## Valuation Methodologies

### Three Approaches

| Approach | Method | Best Suited For |
|----------|--------|----------------|
| Cost Approach | Cost of development/acquisition | Early-stage, no alternative technology |
| Market Approach | Comparable IP transaction data | Comparable transactions exist |
| Income Approach | Present value of future income | Clear monetization pathway |

### Cost Approach

```
Reproduction Cost:
  = R&D Labor + Materials + Equipment + Overhead
  + Opportunity Cost (time value)
  - Depreciation (functional/economic obsolescence)

Example:
  R&D Cost: $500,000
  Overhead: $100,000
  Obsolescence Depreciation: -20%
  Value: (500,000 + 100,000) x 0.8 = $480,000
```

### Market Approach

```
Comparable Transaction Comparison:
  Value = Comparable IP Transaction Price x Adjustment Factor

Adjustment Factors:
  - Technology similarity (0.5-1.5)
  - Market size ratio
  - Remaining protection period ratio
  - Rights scope (exclusive/non-exclusive)
```

### Income Approach (Relief from Royalty)

```
Value = Sum of [Revenue_t x Royalty Rate x (1-Tax Rate) / (1+r)^t]

t: Remaining patent term (1 to N years)
r: Discount rate (WACC basis, 12-20%)
Royalty Rate: Industry-specific benchmark (see below)
```

## Industry Royalty Benchmarks

| Industry | Royalty Rate Range | Median |
|----------|-------------------|--------|
| Pharmaceutical/Biotech | 3-10% | 5% |
| Semiconductor/Electronics | 1-5% | 3% |
| Software | 5-25% | 10% |
| Chemical/Materials | 2-5% | 3% |
| Machinery/Equipment | 1-5% | 3% |
| Consumer Goods | 2-8% | 4% |
| Automotive | 1-3% | 2% |

## 25% Rule (Rule of Thumb)

```
Royalty = Licensee Operating Profit x 25%

Rationale: 25% of patent-contributed profit goes to the patent holder
Caveat: Courts use this only as a reference, not an absolute standard
```

## Patent Strength Assessment

### Patent Scorecard

| Evaluation Item | Weight | Score (1-5) |
|----------------|--------|------------|
| Claim Scope | 20% | Broader = higher |
| Design-Around Difficulty | 20% | More difficult = higher |
| Technical Importance | 15% | More critical = higher |
| Citation Frequency | 15% | More cited = higher |
| Remaining Term | 15% | Longer = higher |
| Market Relevance | 15% | Greater applicability = higher |

### Strength Ratings

| Total Score | Rating | Strategy |
|------------|--------|----------|
| 4.0-5.0 | A (Core) | Active protection, licensing monetization |
| 3.0-3.9 | B (Important) | Retain, portfolio strengthening |
| 2.0-2.9 | C (Moderate) | Cost-efficiency review, sale consideration |
| 1.0-1.9 | D (Weak) | Abandonment/sale recommended |

## License Structure Design

### License Types

| Type | Description | Royalty Structure |
|------|------------|-----------------|
| Exclusive | Only licensee may practice | High upfront + royalty |
| Non-exclusive | Multiple licensees | Lower upfront + royalty |
| Sublicensable | Relicensing permitted | Royalty sharing agreement |
| Cross-license | Mutual practice rights | Royalty-free or balancing |

### Royalty Structures

```
Lump-sum: One-time payment at agreement
Running Royalty: Periodic payment based on sales/volume
Minimum Royalty: Annual minimum guarantee
Milestone: Stage-based payments (development/commercialization)
Hybrid: Lump-sum + running combination
```

## Quality Checklist

| Item | Criteria |
|------|----------|
| Valuation Methods | At least 2 of the 3 approaches |
| Royalty Basis | Industry benchmarks cited |
| Discount Rate | Calculation basis specified |
| Patent Strength | 6-item scorecard |
| Scenarios | Conservative/Baseline/Optimistic (3 scenarios) |
| Remaining Term | Present value based on expiration date |