Intellectual Property Valuation: How to calculate IP Valuation?

 

The term "intellectual property" (IP) refers to a class of property that encompasses intangible makings, such as distinctive identifiers for a company or its goods or services (e.g., logos, brand names). Patents, industrial designs, trademarks, copyright, IT infra, Apps, enterprise IT solutions, ITES, and trade secrets are examples of IP assets. IP assets are transferable, have an economic lifespan, and can be independently identified. The process of determining the fair market or arm's length value of IP assets is known as Intellectual Property valuation. Since intellectual property frequently represents a company's most valuable assets, appropriately valuing such properties is essential to determining the company's true worth.

An IP asset must have the following criteria in order to be quantifiable:

  • It should provide its holder or user with quantifiable financial benefits.
  • It should increase the value of all other assets to which it is related.
  • It should have details of efforts/time/expenses for development

  • Prerequisites of Intellectual Property valuation:

    When completing an Intellectual Property valuation, there are a number of crucial variables to identify and take into account. These consist of -

     

    • Clear identification of the IP.
    • Unambiguous title to the asset.
    • Qualitative and quantitative characteristics of the IP.
    • Earnings capacity and profitability relating to the IP.
    • Market share supported by, or as a result of, the IP.
    • Legal rights and restrictions, competition, barriers to entry, and risks associated with the IP.
    • Product life cycles and positioning.
    • Historical growth and prospects for the future.
    • Investment or expenses which has been incurred to establish IP
  • Source Url : https://www.resurgentindia.com/intellectual-property-valuation-how-to-calculate-ip-valuation

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