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Intellectual Property Valuations

Windeye Partners frequently works with companies and investors in the United States and internationally to appraise the value of intellectual property.

Forms of Intellectual Property

Intellectual property consists of ideas and concepts that can be protected by law and primarily in one of the following forms:
• Patents
• Copyrights
• Trademarks
• Trade Secrets
In addition, there are certain other specialized forms of intellectual property such as right to publicity, trade dress, and domain names.

Purposes for Valuation of Intellectual Property

The need for an independent appraisal of intellectual property typically arises in one of the following situations:
• Transaction pricing and structuring
• Ownership transfers and tax reporting (such as transfers to foreign entities)
• Financial reporting
• Asset collateralization or securitization
• Litigation related to infringement or theft

How to Value Intellectual Property

Intellectual property can create value for its owner through revenue growth, cost savings or blocking of competition. However, the valuation of intellectual property is generally even more challenging than the valuation of an operating business. Valuation methods than can be used include the following:
• Cost Approach
  - Replacement Cost Method
  - Reproduction Cost Method
  - Cost Avoidance Method
• Market Approach
  - Comparable Royalty Rate Method
  - Comparable Transactions Method
  - Comparable Profit Margin Method
• Income Approach
  - Relief From Royalty Method
  - Real Options Method
  - Technology Factor Method

The most commonly used method for patent valuation is the Relief From Royalty Method, if a market size can be reasonably determined, where future revenues from the intellectual property are projected and the value of royalties based on a comparable royalty rate are discounted to a present value.

To discuss our intellectual property valuation services please email us at windeye@windeyepartners.com or contact Michael Guthammar on telephone (929) 223-2935.