Intellectual Property
Valuation, Exploitation, and Infringement Damages, 2017 Cumulative Supplement
Published on 26. May 2017
Book
Paperback/Softback
496 pages
978-1-119-33976-2 (ISBN)
Description
A comprehensive reference for valuation of intangible assets
Intellectual Property, Valuation, Exploitation, and Infringement Damages provides in-depth, up-to-date guidance about the valuation of intangible assets. Covering patents, trademarks, copyrights, trade secrets, and more, this book describes the standards, best practices, and case law relating to valuation, licensing, and infringement damages. Intellectual property strategies are examined from a business economic standpoint, and analytical models are provided to streamline the calculation of valuations, licensing royalty rates, and fair equity splits in joint venture arrangements. Designed to ease the task of attaching monetary value to intangible assets, this invaluable reference includes extensive practical guidance including sample royalty rate information, diffusion sales forecasting models, detailed treatment of investment rate of return, and the valuation of early-stage technology.
Intellectual property is rapidly becoming a major profit center for an increasing number of companies, who may invest billions of dollars in development of an irreplaceable asset. This book provides an authoritative reference for exploiting this property to its fullest extent, and quantifying its actual economic value.
Now that intangible assets are becoming the cornerstones of corporations, applying a logical, analytical approach to valuation has become more important than ever. Intellectual Property, Valuation, Exploitation, and Infringement Damages provides expert guidance for each stage of the asset's life cycle, with recommended procedures and strategies grounded in case law and real-world practice.
Intellectual Property, Valuation, Exploitation, and Infringement Damages provides in-depth, up-to-date guidance about the valuation of intangible assets. Covering patents, trademarks, copyrights, trade secrets, and more, this book describes the standards, best practices, and case law relating to valuation, licensing, and infringement damages. Intellectual property strategies are examined from a business economic standpoint, and analytical models are provided to streamline the calculation of valuations, licensing royalty rates, and fair equity splits in joint venture arrangements. Designed to ease the task of attaching monetary value to intangible assets, this invaluable reference includes extensive practical guidance including sample royalty rate information, diffusion sales forecasting models, detailed treatment of investment rate of return, and the valuation of early-stage technology.
Intellectual property is rapidly becoming a major profit center for an increasing number of companies, who may invest billions of dollars in development of an irreplaceable asset. This book provides an authoritative reference for exploiting this property to its fullest extent, and quantifying its actual economic value.
Now that intangible assets are becoming the cornerstones of corporations, applying a logical, analytical approach to valuation has become more important than ever. Intellectual Property, Valuation, Exploitation, and Infringement Damages provides expert guidance for each stage of the asset's life cycle, with recommended procedures and strategies grounded in case law and real-world practice.
More details
Persons
Russell L. Parr, CFA, ASA is President of Intellectual Property Research Associates (www.ipresearch.com). He is an expert in determining the value of intellectual property. Mr. Parr's books about intellectual property value and management are published in Japanese, Korean, Italian and English. He is dedicated to the development of comprehensive methods for accurately defining the value of intellectual property.
Content
Preface xix
PART I VALUATION 1
Chapter 1A Intellectual Property Landscape (New) 3
1A.1 80% of Corporate Value Is Intellectual Property and Intangible Assets 4
1A.2 Over Seven Million Patents 6
1A.3 Corporations Own the Most Patents 7
1A.4 All Industries Are Patenting Inventions 8
1A.5 Trademarks 10
1A.6 Trademarks Are Supported with Huge Ad Spending 11
1A.7 Copyrights 12
1A.8 Trade Secrets 12
1A.9 Business of Licensing 15
Chapter 1B U .S. Congress Flirts with Disaster (New) 25
1B.1 Patent Litigation Venue 27
1B.2 Patent Infringement Damages 27
1B.3 Injunctions for Only Competitors 29
1B.4 Harming Our Only Economic Advantage 31
Chapter 12A Risk-Adjusted Cash Flows (New) 32
12A.1 Required Rates of Return 33
12A.2 Capital Asset Pricing Model 36
12A.3 Build-Up Method 41
12A.4 Venture Capital Rates of Return 42
12A.5 Probability of Success 45
12A.6 Conclusion 49
Chapter 12B D ealing with Risk and Uncertainty in Intellectual Property Valuation and Exploitation (New) 51
12B.1 Risk versus Uncertainty 53
12B.2 Decision Analysis and Decision Trees 55
12B.3 Decision Tree Components and Conventions 56
12B.4 Monte Carlo Techniques 63
12B.5 Markov Chains 66
12B.6 Obtaining Information from Indirect Observation: Shadow Pricing 70
12B.7 Bayesian Analysis 72
12B.8 Option Pricing Models 75
12B.9 Limitations on Rationality in Decision Making: The Effects of Perception and Biases on Decision Making 78
12B.10 Conclusion 79
Chapter 14A Rights of Privacy, Publicity, and Celebrity Persona (New) 81
14A.1 Introduction 81
14A.2 Legal Underpinnings 84
14A.3 Trademark Rights 87
14A.4 Copyright 88
14A.5 Legal Uncertainties and Solutions 90
14A.6 A Photography Issue 91
14A.7 Conclusion 93
Chapter 14B Intellectual Property and Intangible Asset Volatility (New) 95
Chapter 23A D etermining Royalty Rates (New) 101
23A.1 Royalty Rate Basics 102
23A.2 5% of Sales is the Most Common Royalty Rate 106
23A.3 Forces Driving Royalty Rates 108
23A.4 Industry Royalty Rates 115
23A.5 The "25%" Rule 117
23A.6 Industry Norms 119
23A.7 Return on R&D Costs 120
23A.8 The 5% of Sales Method 121
23A.9 The Analytical Approach 121
23A.10 Comparable License Transactions 125
23A.11 Naked Patents 129
23A.12 Patented Versus Unpatented Technology 131
23A.13 Minimum Royalties 132
23A.14 Upfront License Fees 133
23A.15 Exclusivity 134
23A.16 Royalty Base 136
23A.17 Discounted Cash Flow Analysis And Royalty Rates 138
23A.18 Conclusion 147
PART II L ICENSING 149
Chapter 27A R oyalty Rates and License Fees for Technology (New) 151
27A.1 Royalty Rates 152
27A.2 Per Unit Royalties 155
27A.3 Royalties Based on Profitability 156
27A.4 License Fees 157
27A.5 Medical Device Industry Royalty Rates 159
27A.6 Medical Device Industry License Fee Distribution 160
27A.7 Conclusion 162
Chapter 27B L icense Fees and Royalty Rate Frequency for Technology (New) 163
27B.1 Real Deal Royalty Rates 164
27B.2 Per Unit Royalties 166
27B.3 License Fees 167
27B.4 Conclusion 168
Chapter 27C Royalty Rates and License Fees for Pharmaceuticals and Biotechnology (New) 169
27C.1 The Parties--Licensing between Corporations Dominates 170
27C.2 Royalty Rates 170
27C.3 License Fees 172
27C.4 Key Technologies 173
27C.5 Developmental Stages of Technology 174
27C.6 Conclusion 176
Chapter 27D Licensee Fees and Royalty Rates for Technology Update (New) 177
27D.1 Per Unit Royalties 179
27D.2 License Fees 180
Chapter 33A The Magnitude and Meaning of Royalty Misreporting (New) 182
33A.1 Introduction 182
33A.2 "Why?" versus "How?" 183
33A.3 Math Errors: 5% Error Rate 186
33A.4 Royalty Rate Errors: 4% Error Rate 187
33A.5 Transfer Prices: 4% Error Rate 189
33A.6 Unreported Benchmarks and Milestones: 5% Error Rate 190
33A.7 Unreported Sales: 16% Error Rate 191
33A.8 Disallowed Deductions: 9% Error Rate 191
33A.9 Unreported Sublicenses: 17% Error Rate 192
33A.10 Questionable License Interpretation: 40% Error Rate 192
33A.11 Conclusion 193
Chapter 33B Intellectual Property Audit and Management (New) 194
33B.1 Introduction 195
33B.2 Intellectual Property Is Important 195
33B.3 But Intellectual Property Is Frequently Mismanaged 196
33B.4 Why the Intellectual Property Dichotomy? 196
33B.5 The First Step: An Intellectual Property Audit 197
33B.6 From IP Audit to IP Management 199
33B.7 Insufficient Approaches 200
33B.8 A New Intellectual Property Management Paradigm 201
33B.9 Available Tools 201
33B.10 Benefits of Intellectual Property Management 202
33B.11 When to Do an Intellectual Property Audit 203
33B.12 How to Do an Intellectual Property Audit 205
33B.13 Software Solutions to Make the Job Easier 208
33B.14 Conclusion 211
Chapter 35A Quantifying Reasonable Royalties: The Entire Market Value Rule (New) 215
Chapter 35B N ew Guidance About Apportionment (New) 226
35B.1 Apportionment of the Royalty Base 226
35B.2 The Infringed Invention 227
35B.3 Determination of Damages 229
35B.4 Georgia-Pacific and the Hypothetical Negotiation 232
Chapter 35C Lost Profits for New Businesses (New) 236
35C.1 Why Are Profits Missing 237
35C.2 Guidance from Business Plans 238
35C.3 Management Team 238
35C.4 Operating Capital 239
35C.5 Comparables 239
35C.6 Defendant's Profits 240
35C.7 Before-and-After Analysis Will Not Work 240
35C.8 Lost Business Value 240
35C.9 Conclusion 241
Chapter 45 New Measure of Infringement Damages--Future Damages (New) 242
45.1 Royalty Rate for Future Damages 244
45.2 What About Future Lost Profits? 255
Chapter 45A Continually Evolving Patent Damages (New) 256
45A.1 Post-Verdict Royalty Rates 257
45A.2 Optimize Your Patented Technology or Lose It 262
45A.3 Litigation-Based Licenses 265
Chapter 45B T he 25% Rule Is Dead (New) 270
Appendix G More Sample Royalty Rate Information (New) 273
Appendix H T rademark Royalty Rates (New) 301
Appendix H-A M ore Trademark and Copyright Royalty Rates (New) 319
Appendix I Pharmaceutical and Biotechnology Royalty Rates (New) 357
Appendix J Telecommunications Royalty Rates (New) 381
Appendix K Electrical and Energy Royalty Rates (New) 417
Index 451
PART I VALUATION 1
Chapter 1A Intellectual Property Landscape (New) 3
1A.1 80% of Corporate Value Is Intellectual Property and Intangible Assets 4
1A.2 Over Seven Million Patents 6
1A.3 Corporations Own the Most Patents 7
1A.4 All Industries Are Patenting Inventions 8
1A.5 Trademarks 10
1A.6 Trademarks Are Supported with Huge Ad Spending 11
1A.7 Copyrights 12
1A.8 Trade Secrets 12
1A.9 Business of Licensing 15
Chapter 1B U .S. Congress Flirts with Disaster (New) 25
1B.1 Patent Litigation Venue 27
1B.2 Patent Infringement Damages 27
1B.3 Injunctions for Only Competitors 29
1B.4 Harming Our Only Economic Advantage 31
Chapter 12A Risk-Adjusted Cash Flows (New) 32
12A.1 Required Rates of Return 33
12A.2 Capital Asset Pricing Model 36
12A.3 Build-Up Method 41
12A.4 Venture Capital Rates of Return 42
12A.5 Probability of Success 45
12A.6 Conclusion 49
Chapter 12B D ealing with Risk and Uncertainty in Intellectual Property Valuation and Exploitation (New) 51
12B.1 Risk versus Uncertainty 53
12B.2 Decision Analysis and Decision Trees 55
12B.3 Decision Tree Components and Conventions 56
12B.4 Monte Carlo Techniques 63
12B.5 Markov Chains 66
12B.6 Obtaining Information from Indirect Observation: Shadow Pricing 70
12B.7 Bayesian Analysis 72
12B.8 Option Pricing Models 75
12B.9 Limitations on Rationality in Decision Making: The Effects of Perception and Biases on Decision Making 78
12B.10 Conclusion 79
Chapter 14A Rights of Privacy, Publicity, and Celebrity Persona (New) 81
14A.1 Introduction 81
14A.2 Legal Underpinnings 84
14A.3 Trademark Rights 87
14A.4 Copyright 88
14A.5 Legal Uncertainties and Solutions 90
14A.6 A Photography Issue 91
14A.7 Conclusion 93
Chapter 14B Intellectual Property and Intangible Asset Volatility (New) 95
Chapter 23A D etermining Royalty Rates (New) 101
23A.1 Royalty Rate Basics 102
23A.2 5% of Sales is the Most Common Royalty Rate 106
23A.3 Forces Driving Royalty Rates 108
23A.4 Industry Royalty Rates 115
23A.5 The "25%" Rule 117
23A.6 Industry Norms 119
23A.7 Return on R&D Costs 120
23A.8 The 5% of Sales Method 121
23A.9 The Analytical Approach 121
23A.10 Comparable License Transactions 125
23A.11 Naked Patents 129
23A.12 Patented Versus Unpatented Technology 131
23A.13 Minimum Royalties 132
23A.14 Upfront License Fees 133
23A.15 Exclusivity 134
23A.16 Royalty Base 136
23A.17 Discounted Cash Flow Analysis And Royalty Rates 138
23A.18 Conclusion 147
PART II L ICENSING 149
Chapter 27A R oyalty Rates and License Fees for Technology (New) 151
27A.1 Royalty Rates 152
27A.2 Per Unit Royalties 155
27A.3 Royalties Based on Profitability 156
27A.4 License Fees 157
27A.5 Medical Device Industry Royalty Rates 159
27A.6 Medical Device Industry License Fee Distribution 160
27A.7 Conclusion 162
Chapter 27B L icense Fees and Royalty Rate Frequency for Technology (New) 163
27B.1 Real Deal Royalty Rates 164
27B.2 Per Unit Royalties 166
27B.3 License Fees 167
27B.4 Conclusion 168
Chapter 27C Royalty Rates and License Fees for Pharmaceuticals and Biotechnology (New) 169
27C.1 The Parties--Licensing between Corporations Dominates 170
27C.2 Royalty Rates 170
27C.3 License Fees 172
27C.4 Key Technologies 173
27C.5 Developmental Stages of Technology 174
27C.6 Conclusion 176
Chapter 27D Licensee Fees and Royalty Rates for Technology Update (New) 177
27D.1 Per Unit Royalties 179
27D.2 License Fees 180
Chapter 33A The Magnitude and Meaning of Royalty Misreporting (New) 182
33A.1 Introduction 182
33A.2 "Why?" versus "How?" 183
33A.3 Math Errors: 5% Error Rate 186
33A.4 Royalty Rate Errors: 4% Error Rate 187
33A.5 Transfer Prices: 4% Error Rate 189
33A.6 Unreported Benchmarks and Milestones: 5% Error Rate 190
33A.7 Unreported Sales: 16% Error Rate 191
33A.8 Disallowed Deductions: 9% Error Rate 191
33A.9 Unreported Sublicenses: 17% Error Rate 192
33A.10 Questionable License Interpretation: 40% Error Rate 192
33A.11 Conclusion 193
Chapter 33B Intellectual Property Audit and Management (New) 194
33B.1 Introduction 195
33B.2 Intellectual Property Is Important 195
33B.3 But Intellectual Property Is Frequently Mismanaged 196
33B.4 Why the Intellectual Property Dichotomy? 196
33B.5 The First Step: An Intellectual Property Audit 197
33B.6 From IP Audit to IP Management 199
33B.7 Insufficient Approaches 200
33B.8 A New Intellectual Property Management Paradigm 201
33B.9 Available Tools 201
33B.10 Benefits of Intellectual Property Management 202
33B.11 When to Do an Intellectual Property Audit 203
33B.12 How to Do an Intellectual Property Audit 205
33B.13 Software Solutions to Make the Job Easier 208
33B.14 Conclusion 211
Chapter 35A Quantifying Reasonable Royalties: The Entire Market Value Rule (New) 215
Chapter 35B N ew Guidance About Apportionment (New) 226
35B.1 Apportionment of the Royalty Base 226
35B.2 The Infringed Invention 227
35B.3 Determination of Damages 229
35B.4 Georgia-Pacific and the Hypothetical Negotiation 232
Chapter 35C Lost Profits for New Businesses (New) 236
35C.1 Why Are Profits Missing 237
35C.2 Guidance from Business Plans 238
35C.3 Management Team 238
35C.4 Operating Capital 239
35C.5 Comparables 239
35C.6 Defendant's Profits 240
35C.7 Before-and-After Analysis Will Not Work 240
35C.8 Lost Business Value 240
35C.9 Conclusion 241
Chapter 45 New Measure of Infringement Damages--Future Damages (New) 242
45.1 Royalty Rate for Future Damages 244
45.2 What About Future Lost Profits? 255
Chapter 45A Continually Evolving Patent Damages (New) 256
45A.1 Post-Verdict Royalty Rates 257
45A.2 Optimize Your Patented Technology or Lose It 262
45A.3 Litigation-Based Licenses 265
Chapter 45B T he 25% Rule Is Dead (New) 270
Appendix G More Sample Royalty Rate Information (New) 273
Appendix H T rademark Royalty Rates (New) 301
Appendix H-A M ore Trademark and Copyright Royalty Rates (New) 319
Appendix I Pharmaceutical and Biotechnology Royalty Rates (New) 357
Appendix J Telecommunications Royalty Rates (New) 381
Appendix K Electrical and Energy Royalty Rates (New) 417
Index 451