Intellectual Property (IP) Valuation: Intellectual property protects intangible property resulting from human creativity or invention. In a world driven by technological advancement and the commercialisation of creativity, protecting intellectual property is an inevitable tool for protecting and enhancing the value of these assets. Value creation and growth are the ultimate goals of any management team. The significant crises in the IPR are infringement, passing off, ambush marketing, counterfeiting, misuse of personality rights and unauthorised technology transfer, which requires proper strategies for governing and regulating the issues.
The value of an asset is the ability of any help to drive out competition and move forward in the market with minimised competition. IP assets have an immense quantifiable value that results in significant economic benefit to the owner and can add value to other associated assets. However, derivation of value from an IP Asset is not a simple task, and many carefully calculated steps go into its determination. Value Derivation can be through direct exploitation or the sale or licensing of IP. Even not though such immediate steps, value can be added by minimising rivalry, mitigating the negotiation power of consumers, reducing the threat of substitutes and so on. IP Valuations are necessary for many contexts. These may include investment analysis, Out-Licensing deals, in-house estimation of the worth of created IP, capital budgeting, merger and acquisition transactions, financial reporting and taxable events, bankruptcy and litigation proceedings. The five pillars of the IPM – are IP generation, IP portfolio management by policing the generation and transfer of the IP Assets, valuation of the IP assets and IP capitals, comprehensive analysis of the trends and shortcomings of the IPM and strategic improvising policy transformed the status of the IP assets into inevitable support of the organisation.
However, one great hindrance to their being considered of significant value is the lack of appreciation of practical methods of valuing them, particularly at the embryonic stages of their life circle and more so under conditions of uncertainty about their prospects. The lack of practical valuation methods under such conditions would lead to bad decision-making when managing an IP portfolio.
Intellectual Property management is a compilation of different processes, including Intellectual Property policy formulation and implantation, Intellectual Property valuation and Intellectual Property Audit. Better Intellectual Property management can improve Intellectual Property asses not only by the proper enhancement and enrichment of the Intellectual Property assets but also by identifying the blind spots in the Intellectual Property assets and utilising the potential resource in a more meaningful approach. We, at IIPRD, through our diligent Intellectual Property Management, stipulate an enhanced value to the property by providing the status of greater significance to these intangible assets by adding commercial value to the support.
The Intellectual property strength and weakness of any organisation can be quickly evaluated from the Intellectual Property portfolio, which is the driving factor in corporate transactions. The extent of the opportunity, authenticity, and implementation is determined by the Intellectual Property due diligence, making it a fundamental step to be carried out. The checklist for Intellectual Property Audit can comprise many factors such as the nature of the corporate transaction, valuation and evaluation of the Intellectual Property assets.
We at IIPRD, through its due diligence practices, we begin with gathering data regarding the different aspects of the Intellectual Property assets, such as the intellectual capital, sponsorship, financial requirements, and human capital and assess the statistics for its strategic management. Further, rework and modification of the work are also done by compiling the data regarding potential resources of IP. Additionally, the inventory and data analytics are carried out to give a clear picture of the extent of the Intellectual Property resource and evaluate the potential financial value of the Intellectual Property assets based on various factors such as the magnitude and importance of further modification, improvement, relevance in the industry, innovative applications etc. This is one of the most vital steps in the process of due diligence.
We at IIPRD carry out the process through a dedicated team of people skilled in the art to determine the value and take strategic decisions. The Intellectual Property due diligence assessment of the quantity and quality of the Intellectual Property assets of the organisation helps in the further determination of whether your organisation have the potential for future expansion and advancements.
We at IIPRD, undertake IP valuation in two different modes. In case the objective of valuing an IP is to get a monetary estimation of the worth of the Patent/Trade Secret/Trade Mark for In-house use, IIPRD executes Valuation exercises by going through the concerned portfolio of Technologies/Patents/Trade Marks and the level of protection they have received through registered IPs. To do this, IIPRD conducts a comprehensive technical, commercial, and economic assessment to evaluate the monetary worth of the IPs. To perform our valuations, we have developed proprietary IP valuation models (based on the Income Approach using Cash Flow Estimations) that, based on accurate parameters including the discount and growth rates, useful economic life, royalty rates, and profitability, provide an objective and justifiable valuation of the concerned IP, thereby removing much of the subjectivity involved in the exercise.
In case, on the other hand, the objective of valuing an IP Portfolio is to use the IP In-house and License nationally/internationally to a third party, IIPRD does a comprehensive commercial evaluation of each Patent/Technology/Know-how/Trademark and values it keeping Licensing/Assignment as the primary objective, by undertaking Freedom to Operate Analysis, evaluating commercial opportunities and value of each Technology/Patent/Trade Mark. Our due diligence process in the case of mergers and acquisitions considers the valuation of the Intellectual Property assets as an essential criterion for the growth of the corporates. We gather information about the different Intellectual Property assets of the organisation along with the basic details and identity of the other agreements regarding the licensing, third-party involvements and collaborations. It also includes the parties regarding the ownership and unrecognised Intellectual Property assets. After this, the Intellectual Property analysis is carried out to analyse the trends of the data collected by the inventory of the Intellectual Property assets and sorts the structure of the Intellectual Property portfolio methodically.
We at IIPRD also helps end-to-end Out-Licensing of Technologies to one or more potential licensees by assisting Licensors in identifying potential licensees, demonstrating the value proposition from the concerning technology, and negotiating with the interested licensees to finalise the licensing agreement and affect the deal. IP valuation modus operandi also suggests the strategy that the client can adopt relating to prioritisation of potential licensees, deciding on the best mode of licensing exclusive/non-exclusive and assignment, the decision on the License Fees, Royalty payment, and other terms to commercialise the technology.