Intellectual Property Valuation

Torrey Pines Law Group works with accounting firms, lenders and other financial professionals to value patents and other intellectual property for licensing, financing, acquisitions and disputes. We supply the legal analysis on which a valuation depends: what the asset covers, who owns it, how long it lasts and whether it can be enforced.

Quantitative valuation of intellectual property assets by Torrey Pines Law Group attorneys has been conducted in conjunction with a variety of accounting firms using regression analysis and Monte Carlo analysis when the asset generates revenue.

We also have experience with IP asset valuation, regardless of revenue generation, in conjunction with banking institutions, auction houses, IP infringement insurance providers, and IP litigation financers related to royalty monetization, equity investments, IP securitization, and the like.

When Is an IP Valuation Needed?

Companies and investors usually need to put a number on intellectual property when they negotiate a license or a royalty rate, raise capital or borrow against a portfolio, buy or sell a company or a product line, monetize a royalty stream, insure against infringement claims, or prove damages in a dispute.

How Is Intellectual Property Valued?

Valuation professionals generally use three approaches. The cost approach asks what it would cost to recreate or replace the asset. The market approach looks to prices paid for comparable assets and to the terms of comparable licenses. The income approach discounts the revenue or cost savings the asset is expected to produce, and it is where regression analysis and Monte Carlo analysis are most often used.

What Legal Factors Drive the Value of a Patent?

Each approach depends on legal assumptions. We test those assumptions before the number is relied upon:

• Ownership: Whether the chain of title is complete, the inventors are correctly named, and the assignments are recorded and free of liens.
• Scope: Whether the claims cover the product that produces the revenue, and how easily a competitor could design around them.
• Validity and enforceability: What the prior art, the prosecution history and any pending challenges mean for the patent, as addressed in our IP opinions.
• Remaining term: When each patent expires, including adjustments and extensions, and whether maintenance fees have been paid. See how long patents last.
• Freedom to operate: Whether the product can be made and sold without a license from someone else.
• Encumbrances: Existing licenses, government rights, and field or territory limits that reduce what a buyer or lender actually receives.
• Assets that are not registered: Trade secrets, know-how and other intangible assets, which are often worth more than the patents.

These are the same questions we answer in IP due diligence for acquisitions and financings.

Who Handles IP Valuation Matters

The firm's IP valuation work is handled by Randy Berholtz, Robert Buchanan, Jake Siciliano and Kevin Buckley, with the accounting and financial professionals engaged for the matter.

Talk to us about IP valuation matters: +1 (858) 869-1250 or schedule a consultation.