IP Valuation

Intellectual Property: Valuation, Assessment and Audit Project Presentation Intellectual Property Management IIM Lucknow, Noida Campus

Agenda ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Why Value IP? ,[object Object],[object Object]

Why Value IP? ,[object Object],[object Object],[object Object]

Why Value IP? ,[object Object]

Basic Principles of Asset Valuation ,[object Object],[object Object],[object Object],[object Object],Cash flows Time

IP Valuation - Approach ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Determine basis/context of valuation Select and apply appropriate valuation methodologies Identify asset(s) / understand rights

But Valuing IP is a bit harder … ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Valuing IP is a bit harder ,[object Object]

The fuzzy nature of IP Rights ,[object Object],[object Object],[object Object],[object Object],[object Object]

Valuing IP is a bit harder ,[object Object],[object Object],[object Object],[object Object]

Valuing IP is a lot harder ,[object Object],[object Object]

IP Value Chain Licensor Licensee Customer IP IP Royalty Revenue IP Market Product Market

Valuing IP is a lot harder ,[object Object],[object Object],[object Object],[object Object]

All IP valuation methods derive from one of three approaches Deprival value Value $$$ Replacement cost Net realisable value Net present value/value in use Lower of Higher of Valuation methodology Market Cost Income (DCF)

Cost-based methods ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Market-based methods ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Income method ,[object Object],[object Object],[object Object],[object Object],[object Object]

So far … ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Valuation of Patents ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Patents - Qualitative Valuation methods ,[object Object],[object Object],[object Object]

Valuation of Trademarks ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Income method – Trademark valuation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Income method – Trademark valuation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Demand side factors Incremental cash flows Supply side factors Volumes x Prices x Margins – Capex / Working capital Risk and return Customer acquisition / retention Staff acquisition / retention Brand support Brand extension costs Supply terms Financial Capital Economies of scale Growth Value

Relief from royalty: discounting projected royalty flows to a present value Range of royalty rates Taxation Incremental cash flows Discount rate Forecast revenues Other costs Present value

Comparable royalties approach ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Income approach and royalties – allocation of available profits ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Excess return on capital Tangible Intangible Operating profits Cost of tangible assets and other resources Rate of Return x Brand Others Discount Rate Value x Example: the method used by Interbrand in its “Top 100 Brands” tables.

Risk Assessment ,[object Object],[object Object]

Different assets face different types of Risk ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Damages: The Cost of infringement ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The nature of infringement ,[object Object]

The Theory of Infringement ,[object Object]

Wilful Infringement ,[object Object],[object Object]

So far … ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

IP Audit ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Why do an IP audit? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Benefits of IP Audit ,[object Object],[object Object],[object Object],[object Object],[object Object]

Issues unearthed in IP ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

IP Valuation

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