Appraising the IP Portfolio
What is the value of an asset?
- An asset is only valuable if it is of use to the person
o E.g. pushchair would only be valuable to someone who is pregnant or has children,
not to someone who has no children and is not expecting
o E.g. value of spare tyre in your car is only realised when your tyre pops
- Value depends on the individual, it’s subjective
Valuing Value:
- The value of an IP asset derives, in essence, from its ability to exclude competitors from a
particular market.
- IP Valuation is the process used to determine the monetary value of IP.
Why should companies value their intellectual assets?
- Improves the accuracy of a company’s worth
o If you don’t know the value of your brands, it could mean your company valuation
is a lot higher than you would have assumed
- Can form collateral which can be bought, licensed and sold
- Knowing how much each component is worth can help a business raise funding
o Bank can recognise financial strength of the company and would be more willing to
lend money
- For any company (in particular IP intensive companies) intellectual (intangible) assets are
as important as physical (tangible) assets
o Stock and machinery are all considered assets to a company
o Intangible assets are just as important as the physical ones
Defining intellectual assets:
- An enterprise’s assets can be divided into two categories:
o Tangible assets: including buildings, machinery, equipment, cash and office supplies
o Intangible assets: that lack physical existence and are fruits of a company’s
creative and innovative talents.
- For many enterprises intangible assets have become more valuable than their tangible
assets and are key to their success. They create a basis for enhancing the company’s
value.
- Intellectual Assets means trademarks, service marks, trade names, and internet domain
names, together with all goodwill, registrations and applications related to the foregoing;
patents and industrial design registrations or applications (including any continuations,
continuations-in-part, renewals, reissues, re-examinations and applications for any of the
foregoing); works of authorship protected by copyright registrations; copyrights (including
any registrations and applications for any of the foregoing); trade secrets and other
confidential information, know-how, proprietary processes, formulae, algorithms, models,
and methodologies (Lawinsider.com).
- IP assets are legally protected, and that protection can be enforced in a court of law.
They can be independently identified, are transferrable, and have an economic lifespan.
- Depending on the nature of your intangible assets, you are offered different legal
instruments by which you may protect and ultimately benefit from using them. IP protection
and management should be a key element of your business strategy.
, - E.g. identified new technology that you think will improve the world, but you can’t protect
as it’s not been registered so can be reproduced, meaning you do not have an intellectual
asset (only have intellectual property here) → as this item wasn’t patented you would not
have monopolistic rights over it ~ protection needs to be enforceable by law
- It is important to understand the economic value of your IP assets by carrying out an IP
valuation. Having an idea of how much your assets may be worth will be helpful for
various transactions including licensing, sale, donation of IP rights or entering into joint
ventures and other collaborative arrangements.
- Patent + registered rights = Hard IP
o Definitive process in which these rights are protected
- Soft IP is considered more intangible in a sense
o However, this can be countered e.g. Coca-Cola relies on their trade secrets to
keep the brand afloat, therefore can be considered very important as well
Understanding value:
Exclusivity:
- The value of an IP asset essentially comes from the right the owner of that asset has to
exclude competitors from using it. For an IP asset to have a quantifiable value it should:
o Generate a measurable amount of economic benefits to its owner/user
o Enhance the value of other assets with which it is associated
Future benefits:
- The value of an IP asset represents the potential future economic benefits to the IP owner
or authorized user.
- Value can be derived through:
o Direct exploitation of the IP by integrating it within the product
▪ E.g. If you take your invention and produce it and bring it to market, that is
direct exploitation
o Sale or licensing of the IP to a third party
▪ E.g. Within a patent pool, use your IP with others IP where you are licensing
your patent – still gaining value alongside someone else
o Other means, such as raising barriers to entry or reducing the threat of substitutes
What is the value of an asset?
- An asset is only valuable if it is of use to the person
o E.g. pushchair would only be valuable to someone who is pregnant or has children,
not to someone who has no children and is not expecting
o E.g. value of spare tyre in your car is only realised when your tyre pops
- Value depends on the individual, it’s subjective
Valuing Value:
- The value of an IP asset derives, in essence, from its ability to exclude competitors from a
particular market.
- IP Valuation is the process used to determine the monetary value of IP.
Why should companies value their intellectual assets?
- Improves the accuracy of a company’s worth
o If you don’t know the value of your brands, it could mean your company valuation
is a lot higher than you would have assumed
- Can form collateral which can be bought, licensed and sold
- Knowing how much each component is worth can help a business raise funding
o Bank can recognise financial strength of the company and would be more willing to
lend money
- For any company (in particular IP intensive companies) intellectual (intangible) assets are
as important as physical (tangible) assets
o Stock and machinery are all considered assets to a company
o Intangible assets are just as important as the physical ones
Defining intellectual assets:
- An enterprise’s assets can be divided into two categories:
o Tangible assets: including buildings, machinery, equipment, cash and office supplies
o Intangible assets: that lack physical existence and are fruits of a company’s
creative and innovative talents.
- For many enterprises intangible assets have become more valuable than their tangible
assets and are key to their success. They create a basis for enhancing the company’s
value.
- Intellectual Assets means trademarks, service marks, trade names, and internet domain
names, together with all goodwill, registrations and applications related to the foregoing;
patents and industrial design registrations or applications (including any continuations,
continuations-in-part, renewals, reissues, re-examinations and applications for any of the
foregoing); works of authorship protected by copyright registrations; copyrights (including
any registrations and applications for any of the foregoing); trade secrets and other
confidential information, know-how, proprietary processes, formulae, algorithms, models,
and methodologies (Lawinsider.com).
- IP assets are legally protected, and that protection can be enforced in a court of law.
They can be independently identified, are transferrable, and have an economic lifespan.
- Depending on the nature of your intangible assets, you are offered different legal
instruments by which you may protect and ultimately benefit from using them. IP protection
and management should be a key element of your business strategy.
, - E.g. identified new technology that you think will improve the world, but you can’t protect
as it’s not been registered so can be reproduced, meaning you do not have an intellectual
asset (only have intellectual property here) → as this item wasn’t patented you would not
have monopolistic rights over it ~ protection needs to be enforceable by law
- It is important to understand the economic value of your IP assets by carrying out an IP
valuation. Having an idea of how much your assets may be worth will be helpful for
various transactions including licensing, sale, donation of IP rights or entering into joint
ventures and other collaborative arrangements.
- Patent + registered rights = Hard IP
o Definitive process in which these rights are protected
- Soft IP is considered more intangible in a sense
o However, this can be countered e.g. Coca-Cola relies on their trade secrets to
keep the brand afloat, therefore can be considered very important as well
Understanding value:
Exclusivity:
- The value of an IP asset essentially comes from the right the owner of that asset has to
exclude competitors from using it. For an IP asset to have a quantifiable value it should:
o Generate a measurable amount of economic benefits to its owner/user
o Enhance the value of other assets with which it is associated
Future benefits:
- The value of an IP asset represents the potential future economic benefits to the IP owner
or authorized user.
- Value can be derived through:
o Direct exploitation of the IP by integrating it within the product
▪ E.g. If you take your invention and produce it and bring it to market, that is
direct exploitation
o Sale or licensing of the IP to a third party
▪ E.g. Within a patent pool, use your IP with others IP where you are licensing
your patent – still gaining value alongside someone else
o Other means, such as raising barriers to entry or reducing the threat of substitutes
