IP Valuation – keep it simple, focus instead on creating value

So said Ruud Peters (Phillips) at the CIP Forum in Sweden earlier this year.

Typical of Ruud, it sounds simple, but there’s a lot more detail in there than you think.

I’ve just spent a few weeks on the road, in Tokyo, Osaka, Shanghai, Beijing, Singapore and Kuala Lumpur.  Some of this time was chairing, presenting and most importantly, listening and conversing at conferences.  Most of the time was spent working with clients. 

The subject of valuation comes up so often and people ask so often about the ‘best method’ to use.  Revenue or Cost?  Net Present Value? Black magic?

Truth is it depends on the context and whatever you choose it won’t be the real value.  The real value isn’t monetary, or only monetary, the real value of intellectual property is so much more than that.

A samurai sword is perhaps differently applied by a trained Samurai than a toddler who can hardly pick it up.  A patent in the hands of Rambus is perhaps differently applied than the same one in the hands of a small tech startup. 

Yes, we definitely need to get better at analysing value of intellectual property (not just patents), but maybe we should spend a lot more energy on creating value.

 

[Photo Credit: Okinawa Soba]

2 Comments on “IP Valuation – keep it simple, focus instead on creating value

  1. As an IP valuation professional, I can assure you “black magic” is never the best method.  Just last week, U.S. Tax Court ruled that an intangible asset valuation by Symantec/Veritas was “arbitrary, capricious, and unreasonable” based on its expert’s use of the “wrong useful life, discount rate, and growth rate.”Such errors/oversights can cost innovative companies millions, which could otherwise be devoted to the pursuit of value creation.  So while I agree with Mr. Peters’ overall sentiment, the importance of qualified valuation experts and sound fundamental valuation techniques should not be understated.Daniel J. SteinertOcean Tomo, LLC

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