Patent for Invention and Utility Model Certificate: Related Fees

If you are an inventor, you might have been increasingly asking yourself how much your invention would cost. Unfortunately, the idea itself brings money very rarely, but if you have a patent for a technical decision, you can roughly predetermine the related fee.

A patent is a document issued by the Russian Federal Service for Intellectual Property (hereinafter the Rospatent) certifying the priority, authorship and exclusive right to an invention, utility model or design invention.

By definition, the patent is a document certifying the rights of a patent holder to a specific decision. In other words, a patent only provides information about a technical decision and not the decision itself. A patent is an intangible asset and, as it is, a decision can only be revealed once it is implemented.

How are the patent related fees determined and what factors do affect them? The value of the rights to an invention or other subject matter protected by a patent is entirely determined by the economic benefits that the rights holder may receive from the introduction and use of his or her innovations in business or other areas. These benefits may have the form of creating new goods or giving new properties to old goods, reducing the cost of producing goods or services, expanding markets and solving any other important tasks.

Patent valuation has its own specificity, which is that the applicability of comparative and cost assessment approaches to such objects is very limited.

A comparative valuation approach based on comparing an object of valuation with its market analogues is very rarely used for valuation of intellectual property, since an invention or a utility model are always unique objects and comparing them with their analogues will always be incorrect, since it ignores the uniqueness of the decision. In addition, the information itself on patent sales transactions is almost always closed or difficult to access.

When it comes to the application of cost approach methods, it is also struggling. That means the cost calculation methods based on the analysis of the cost of creation of the object of assessment, since the cost of the patent may be quite weakly related to the costs of its development and there are many examples when commercially successful developments are made with a very modest budget.

The most common approach to patent valuation is the income approach, and it is its methods that reliably determine the market value of a patent. These methods make it possible to calculate the value of the subject matter being valued based on an analysis of the potential income that the rights holder may receive from the use of the invention. In other words, the methods of the income approach link the value of the patent being valued with the commercial efficiency of the patent being valued.

It should be understood that the cost of a patent may be affected by different factors, for example:

• Importance, i.e., how revolutionary and popular the innovations is. The technical decision may be a breakthrough, or it may consist in upgrading a technical decision which is already known. Even a small innovation can bring significant production benefits and force competitors to conduct new research to upgrade their technology.
• The market and its characteristics: this factor is very difficult to overestimate, even the method of cost calculation may change depending on the market. Is there competition, is there a developed patent market in the region of interest? Such indicators as supply and demand will be important for this factor. Are there many developers in the particular field or, for example, are many people trying to improve the details in the same mechanism? And if, accordingly, everyone will offer a different patent, then the price can be knocked down, referring to the fact that the supply is not the only one in this market and there is something similar.
• Term of validity, i.e., the remaining term of protection of the intellectual property, directly affects its price. If the patent has a couple of years left, then the rights holder, unfortunately, will not make millions with it, even if the developed technical decision is a breakthrough one. This is because the less a patent has to be valid, the less time is left for the so-called monopoly right to use such a decision and the less time is left to get the most out of the purchased right.
• Known background of the invention, i.e., if the patent is just a link in a chain, representing one of many related innovations, the price can go down. On the other hand, if the innovation is independent or the first link in the chain, the price may be higher. This factor is directly related to the market and its characteristics.

The factors presented above do not compose a complete list. In reality, the experts take into account not only the features of the patent and market, but some other global or local trends as well.

For the purpose of a complete and balanced valuation, complex methods are usually used, which contain elements of different approaches. A stable set of such methods of calculation has even got its name in the special literature, which is the combined approach.

In order to assess the value of a patent for an invention or utility model, specialists may need all kinds of documents and information, as follows.

Thus, it is rather difficult to determine the cost of a technical decision protected by a patent. Such complexity is related both to the specifics of the object which is not a tangible asset and a large number of subtleties and nuances in the evaluation. Let us also remember that the request of the patent owner will also have a significant impact on the value of this intellectual property.