Intellectual Property Valuations

Publication Date11 March 2022
SubjectIntellectual Property, Copyright, Patent, Trademark
Law FirmHGF Ltd
AuthorClaire Jones

Intellectual property can be business assets and valuations can assist in determining their true value. IP is often the most valuable asset within a business, and innovation and technology in today's world means that there is some element of IP in almost every commercial interaction that a busines engages in. The value of IP assets can be useful when, for example, a business is seeking outside investment, exploring licensing and joint venture opportunities, mergers and acquisitions or other tax, finance or marketing purposes.

A brand can be protected by trade marks and designs (both registered and unregistered).

There are also a number of other assets within an IP portfolio to consider including:

  • goodwill
  • know-how
  • research and development
  • trade secrets
  • databases and customer lists

The World Intellectual Property Organisation and UK Intellectual Property Office (amongst others) provide guidance on evaluating IP assets, and the prerequisites are that the assets should:

  • be separately identifiable
  • tangible evidence of existence
  • created at an identifiable point in time
  • be capable of being legally enforced and transferred
  • should be able to be sold independently of other business assets
  • subject to destruction or termination at an identifiable point in time

For IP assets to have a quantifiable value, they should generate a measurable amount of economic benefits and enhance the value of other assets with which they are associated.

There are a number of valuation methods available when considering IP valuations including quantitative (cost-based, market-based, income-based) and qualitative (ratings...

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