How to Value: IP Law

Much like IP managers and accountants, IP lawyers are concerned with how to value intangibles in the event of a transfer of intangibles, a merger, or an acquisition, especially when those intangibles are legally protected under patents, copyrights, or trademarks.  Valuation essentially melds both economic concepts of value with the legal concept of property (whether or not it is legally protected), which is where IP lawyers are an important part of the valuation equation. 

First of all, usually the valuations in which IP lawyers are concerned involve one or two interested parties, usually a buyer and seller.  Since the value to each of parties will depend upon their circumstances, IP lawyers and valuators should take these circumstances into account to arrive at a meaningful valuation.

Next comes actually calculating an appropriate value of the intangibles in question.  Calculating the value of certain marketing intangibles is usually not a major problem when they have been formally protected through trademarks, patents or copyright, as these protections can help identify and value these intangibles.  However, certain trade intangibles such as know-how, training systems and methods, technical processes, customer lists, and distribution networks can be more difficult to identify and therefore difficult to value them by the earnings and profits they generate.  To properly value and identify a company’s intangibles, a due diligence analysis needs to be undertaken together with IP lawyers, valuators, and in-house accountants.