Canaan Bridges Consulting | 3 min read
Is there a value assigned to your intellectual property in its consumer markets? What valuations can be assigned to your intellectual property? The objective of an IP valuation is to provide a dollar value to specified intellectual property. This may be of particular interest if you plan to sell, license, assign IP, or if the IP is part of a group of assets in corporate transactions such as merger and acquisitions. Knowledge of IP values is also useful in infringement proceedings where it is used in the calculation of damages.
Knowing your IP value may help to:
- better position your business in local and global markets. For instance, if you are planning to license in or license out intellectual property, knowing its value will provide better leverage in negotiations.
- strategize in developing effective IP and business strategies. Valuations may either give you the green, red or cautionary amber light in taking next steps in expanding your business.
- securitize loans and other credit facilities. In another related context, the capital value of IP can be used as a base for providing IP insurance to businesses.
- diversify your IP, product and service portfolios by knowing how your IP asset fares as investments and in consumer marketplace. An IP valuation can be helpful in deciding whether you should venture into spin-offs industries, undergo improvements on existing patents or pursue further research and development initiatives.
To achieve meaningful outcomes, it is relevant that :
- The IP to be valued is ascertainable or identifiable from other types of assets. Since not all intangibles are intellectual property, it is best to conduct an intellectual property audit to ascertain the scope of actual IP that makes up the portfolio.
- The IP should either have real prospects or actual value to its rightholder(s) from an economic perspective. The basis of the valuation is to find the economic worth of the IP. If the IP has no commercial value, then it is hardly likely to be beneficial to the valuation process.
- The proprietary right is a valid intellectual property and is therefore not in the public domain. An expired patent, an abandoned trademark that has become generic, and music and literary works that are in the public domain are not legally recognized as valid intellectual property.
An IP valuation is useful as an intellectual property strategy to further commercialize and manage relevant IP. As a multi-purpose strategy, it impacts the direction and long term viability of IP-intensive firms.