What do I have to consider for selecting an appropriate valuation method to calculate the economic value of my intellectual property?

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Several approaches and methodologies are commonly used to estimate the value of intellectual property assets. However, businesses often have some difficulty in selecting the method that is most appropriate for valuing a specific asset in a particular business situation, since they all have their limitations and no one method is exclusively suitable in all cases.

There are sets of rules and criteria which may be applied before deciding how the economic value of the IP will be calculated.  It is very important to consider the following aspects:

  • the type of IPRs (e.g. trade marks, industrial designs, patents);
  • the purposes of the valuation;
  • the relevant information available;
  • the potential market for them (geographical coverage);
  • the risks associated with the investment in intangible assets; and

the type of the business activities of the parties and the competitors involved in the transaction where the IP constitutes the relevant element (e.g. transfer or licensing of IP).