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Valuation of Intellectual properties

The concept of valuation of intellectual property and other intangible assets of a company is new as compared to other concepts of intellectual property (IP) law. The value of an IP is a monetary compensation that is expected to be received from licensing of an IP or from sale or exchange of other intangible assets. The intangible assets of a company include goodwill, trademark, brand, copyright, logos, technology, know how, trade secrets etc.

How can we say that Intellectual Property has a value?
There are various circumstantial evidences to prove the same.

  • Money and time are spent on registering an IP
  • IP protection involves legal and other costs
  • A lot of amount is spent on advertising brands- IP contributes to national economic accounts. What are the areas that require IP valuation?
  • Purchase and Sale of Assets
  • licensing
  • Corporate Finance
  • Litigation
  • Transfer Pricing
  • Financial Reporting

How can Intellectual Property be valued?
There are mainly three methods of valuation of IP.

  • Cost Based Method
  • Market Based Method
  • Economic Based Method
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