There is an ever-growing shift toward the knowledge-based economy and intellectual property rights are increasingly understood as supporting and promoting economic growth. In such a climate, businesses that base their operations on intangible assets and innovation need to be cognizant about legally protecting and capitalizing on these investments.
Registered and granted intellectual property rights, such as granted patents, trademark registrations, and copyright registrations, which are acquired by application to intellectual property offices, provide legal evidence of ownership over intangible assets as well as give businesses the right to exclude others from use of these rights. This allows businesses to protect their intellectual property from use by competitors and provides businesses with an asset which can be profitably licensed or sold.
Why it’s so important?
Intellectual property valuation can help businesses determine the true value of their intangible assets and capitalize on their investments in innovation. For example, assessing the value of patent, trademark or copyright rights may simplify the licensing or assignment process by helping businesses determine the royalty rates that should be paid as a result of others using their intellectual property. Further, valuation of intellectual property, if not currently accounted for, assigns value to a business and may provide a business with collateral for loans or mortgages. For new businesses, an accurate and substantiated valuation of intellectual property assets is likely to increase outside investment into the venture.
Valuation methods
The value of an intellectual property can be determined by many factors, but the overarching principle guiding valuation is how much of a competitive advantage over others in the industry your intellectual property provides. When determining the worth of intellectual property, two methods of valuation have traditionally been used – quantitative and qualitative valuation.
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