Valuation of intellectual property rights

Valuation of intellectual property rights is an integral part of a free and modern market economy. It plays a very important role related to the professional activities of most institutions and organizations around the world. The rapid spread of technologies, innovations, artificial intelligence, as well as growing globalization directly affect the management and adoption of investment decisions. Evaluation of intellectual property rights is one of the activities of the lawyers of our company “PRIKHODKO & PARTNERS”. It is part of complex processes that cannot be carried out without careful economic, financial and legal analysis. For example, it is impossible to build a universal model that can be used in any situation. A reliable and reliable assessment requires both an individual approach to each of the subjects of intellectual property, as well as an analysis of the disadvantages and advantages of each method of assessment of intellectual property rights.

Objects of intellectual property subject to evaluation

In accordance with Article 418 of the Civil Code of Ukraine “Evaluation of property rights of intellectual property”, rights to the following objects of intellectual property are assessed:

• Artistic and literary works.
• Databases, computer programs.
• Animal breeds, plant varieties.
• Rationalizing proposals.
• Videograms, phonograms, programs.
• Useful models, inventions, industrial samples.
• Commercial secrets.
• Other objects that belong to objects of intellectual property rights in accordance with current legislation.

In most cases, the valuation process determines the value of business reputation (goodwill) and business. The value of each individual asset or group of assets is also assessed.

In what cases does it become necessary to assess intellectual property rights?

The value of intellectual property rights arises when:

1. Conclusion of agreements on joint activities.
2. Accounting of intangible assets.
3. Conclusion of license agreements for the transfer of know-how.
4. Determination of damages in case of illegal use of objects of intellectual property rights.

Appraisal of property rights and property in Ukraine is regulated by the Law of Ukraine “On Appraisal of Property, Property Rights and Professional Appraisal Activities in Ukraine” in accordance with current national standards.

Approaches to the assessment of intellectual property rights

There are two main approaches to the assessment of intellectual property rights:

Comparative assessment

Comparative assessment is one of the main methods of intellectual property assessment. It is based on the use of an evaluation model of comparative rights, which are distinguished by similar parameters. For example, inventions must have a common purpose, be in the same field and be used for profit (commercial feasibility).

The choice of intellectual property rights thus plays a key role in shaping the valuation of intellectual property rights.

Profitable method

This method is developed on the basis of an approximation to generate future income from investment, operational and financial realization of intellectual property rights. Most often, it is used to estimate income in the initial and final phase. That is, this method is universal. Factors that are taken into account when determining the value: the volume and capacity of the generated cash flow, the cost of capital/debt, growth rates, etc.

The following documents must be prepared for the assessment of intellectual property rights:

1. Description of the object of intellectual property.
2. Information about payments – confirmation of registration of an intellectual property object.
3. Legal documents (patent, certificate, etc.).
4. Business plans for enterprise development.
5. Marketing market research.
6. Information on the costs of creating and further advertising the object of intellectual property.

Peculiarities of assessment of intellectual property rights

The assessment of intellectual property rights consists of the following stages:

• Legal expertise.

At this stage, documents are studied that act as confirmation of the owner’s right to the object, the validity period and the scope of these rights).

• Making calculations, determining the value of intellectual property rights.
• Preparation of the report.

All you need to do at the first stage is to provide a patent or a certificate for an intellectual property object.

The lawyers of our company “PRIKHODKO & PARTNERS” evaluate the rights to intellectual property objects in various options. You should remember that any objects of intellectual property are potential economic reserves of your firm or enterprise.

We will help you create a successful business, evaluate and protect your intellectual property, taking into account current Ukrainian legislation.