FACTSHEETIntellectual Property Valuation www.ec.europa.eu/ip-helpdeskEuropean IP HelpdeskFact Sheet2I. Introduction 3II. Why you should care about intellectual property valuation 4III. Who should be involved in the evaluation 6IV. How is valuation performed ? 7 1. Quantitative approach 8 2. Qualitative approach 10V. Selecting the right method 11VI. Useful Resources 12SummaryApril 20231 1 This fact sheet was first published in June 2013 and updated in April 2023.European IP HelpdeskFact Sheet3I. IntroductionIntellectual property (IP) assets such as patents, trademarks, copyrights or trade secrets are increasingly the core of many organisations and transactions. Licensing and assignments of corresponding IP rights are common, and the use of these types of assets as loan security has grown. Hence the growing importance of the valuation of intangibles: trading an asset requires knowing its value.Several methodologies are commonly used on the market to value these assets. This fact sheet will explain the different methods, and examples of possible use scenarios of these methodologies are given. Different tools have been created by public organisations to assist companies in performing valuations. These free tools will also be presented in this document to help you save time and money. However, it has to be underlined that it is always recommended to consult an IP lawyer or IP valuation professional to ensure that the right method is chosen and applied correctly.European IP HelpdeskFact Sheet4II. Why you should care about intellectual property valuationThe valuation of IP rights is part of good IP management practices within an organisation. Indeed, knowing the economic value and importance of your organisation’s IP rights is key to the strategic decisions to be taken on your assets. Still, it also facilitates transactions and the commercialisation of your IP rights. There are many business situations where valuation is required, such as:a. Valuation of a company for a merger, acquisition, joint venture or bankruptcy: Companies are increasingly based on intangible assets and investment in R&D and knowledge. As expenditures in intangibles rise, so does the share of intangible assets in a company’s value and on the market as a whole2. Therefore, to know the value of a company, it is essential to know the value of its IP. b. Technology transfer, e.g., assignment or licensing of IP rights: As in other business transactions, organisations negotiating agreements to sell or license IP rights commonly have to agree on a price. Knowing the value of the IP right is essential to reaching such an agreement and ensuring the parties engage in a good deal. c. Support in situations of conflict, such as court proceedings or alternative dispute resolution mechanisms (such as arbitration and mediation): In conflict scenarios, quantifying damages is often a necess...
