Intellectual property valuation rights is an essential element of successful intellectual property management within a company. Knowing the economic worth and relevance of the intellectual property rights you produce and develop helps with strategic asset decisions and makes commercialization and transactions with intellectual property rights easier.
Intellectual Property Valuation:
Intellectual property valuation is the process of assigning a monetary value to a company’s intangible assets. Trademarks, copyright, and computer software are examples of intellectual property that corporations hold. Patents, industrial designs, and trade secrets are examples of innovative commercial goods consider intellectual property.
A variety of factors may require determining the value of the intellectual property. One of the most common causes is that the company or owner of the intellectual property wishes to sell it to another party. Another reason for intellectual property valuation is tax purposes when government organizations like the Internal Revenue Service (IRS) want to know how much the property is worth.
Situation when Intellectual Property Valuation Required:
Financing and bankruptcy are two more scenarios in which an IP valuation is require. Companies have internal valuation needs and external sources that need to know how much intangible assets are worth. For example, if one of the assets is purchased or sold, intellectual property valuation is required for the purchase or sale to be appropriately recorded in the firm’ financial records.
In general, intellectual property valuation is concerned with the asset’s fair market value. The fair market value (FMV) is the price at which a willing seller and a willing buyer would agree to swap the asset’s ownership.
To put it another way, fair market value is the asset’s existing worth in a hypothetical circumstance. For the IP valuation to be as realistic as possible, all parties engaged in the transaction must know all of the intellectual property value that is part of the intellectual property value.
Business Circumstances that require Valuations:
- A company’s value is determine in the event of a merger, acquisition, joint venture, or bankruptcy. It is critical to understand the importance of a company’s intellectual property to determine its worth. Early-stage valuations are one of our services; you only have one shot in front of an investor, so it’s critical to put your best foot forward for the financing gap to market the early-stage product from the outside.
- Intellectual property valuation rights are being sold or licensed in negotiations. Organizations negotiating agreements to sell or license intellectual property rights must agree on a price like any other commercial transaction. Knowing the value of an intellectual property right is critical for reaching an agreement and ensuring that both parties are getting a fair bargain.
- Support in conflict circumstances, such as in court or through alternative dispute resolution processes. Damages quantification is frequently a critical stage in the dispute resolution process. To ensure a fair recovery of damages, an accurate assessment of the intellectual property right at issue is required.
- Bank loans or venture capital might used to raise funds. It is critical to value intellectual property to use it as collateral for bank loans or attract venture capital and investors. Indeed, numerous studies show that patent ownership and good IP management are essential factors in venture investors’ decisions.