Case 3 - Formula for Valuing a Patent's Contribution to a Multi-patent Product
Our client, a highly successful developer of implantable medical devices, needed to agree a formula with a self funded collaborative research institution which had in the past and continues to provide the company with variations and enhancements to its lead product. The current technology was underpinned by a large number of patents, some of which were critical to the product’s overall utility while others supported less significant attributes of the product and peripherals. Some patents were strategic in nature. Patents had a broad range of residual lives.
The task was to provide a formula, to be applied every period in which a royalty was due, for determining royalty amount that may be due for an incorporated invention made by the collaborator that gave consideration to all patents that were in play at the particular point in time, weighting the patent relative to all others of relevance while allowing for the fact that product was being sold prior to the introduction of the new technology (ie. to be based on incremental growth only).