Intellectual Property Valuations

• Published date: 11 March 2022
• Subject Matter: Intellectual Property, Copyright, Patent, Trademark
• Law Firm: HGF Ltd
• Author: Claire 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...