Topics: IPR Valuation: Growing field of IPR

The workshop on IPR Valuation: Growing field of IPR was organized on 30th January 2021. The event commenced at 5:30 PM IST with an inaugural speech by the Event Manager Manya Jain and the Moderator Ritesh Kumar which was immediately followed by a video introduction to The IP Press. The workshop began with a series of questions related to IP to which we received a spontaneous response. After a rapid Q/A session, the moderator, Ritesh, gave a strong start to the workshop with an introduction to our speaker Mr Ravi Pandey.

Mr. Ravi Pandey initiated the session with a PowerPoint presentation (Click here to access) on IPR Valuation which consisted of the following:

Three major approaches for valuating an IP:

1.Cost approach extensively focuses on the cost levied in developing the IP.

2. Income approach deals with capitalizing the future cash inflows.

3. Market approach is used for determining the value of IP, based on the value of similar pre-existing ones.

Components of Valuation:

  • Market size- Prospective licensee will choose a desirable location wherein the IP is saleable at a higher demand.
  • Technology life cycle- Examining the viability of IP on factors of it becoming rudimentary or obsolete.
  • Growth rate- To determine the growth rate of the IP, the demand for the same shall be examined primarily.
  • Percentage margin/ BOM Cost- The valuer must consider the profitability of the IP. Higher the percentage margin, higher will be the return.
  • Cost incurred- The cost incurred on commodities, labour, project size, the time duration in developing such IP sought to be calculated for the purpose of valuation.
  • Competitors- Comparing the technology of pre-existing IP in the market based on parameters of cost-effectiveness.

At what stage shall IP valuation be done?

The speaker referred to the practical example of a ‘triage’ while proposing a model for the valuation of an IP. According to the above-mentioned model, wounded soldiers were assessed on the degree of urgency of treatment. Soldiers with high recovery rates or soldiers of great importance in the army were medically prioritised. Along the same lines but in terms of IP valuation, the speaker suggested that the method of triage could be prominently applied.

To ascertain whether an IP qualifies for valuation, the following points are to be kept in mind:

  • No licensee will be interested in the valuation of an IP that is in the ideation stage.
    • Secondly, any IP below Technology Readiness Level 4 (TRL- 4) may not be desirable for valuation.
    • Thirdly, if the technology is not validated, it will not be eligible for valuation.
    • A mere grant to a patent application will not entitle the IP for valuation.
    • Lastly, an industry appraises a validated technology, preferably, at TRL-6 or above. And likewise, they run it through another validation process.

Negotiation components

  • Exclusivity
  • Jurisdiction
  • Licensing Domain
  • Royalty
  • Upfront payment
  • Sublicensing consideration
  • Licensing duration
  • Equity share

Mr. Ravi also gave an insight into a few projects of IP Valuation that he worked on, wherein he highlighted the application of the aforementioned methodologies.

Subsequently, the attendees posed several questions, some of which are as follows:

  • If a technology is in TRL-2 but not patented, however, it is patented at a later stage, will the valuer consider the time taken in the due process? 
  • What are the key factors which affect the valuation?
  • For what margin would the Public Funded Organizations prefer to negotiate over the total cost of the innovation?
  • What is the scope in the valuation field for law graduates having commercial backgrounds?

All questions including the above were patiently answered by Mr. Ravi Pandey.

A vote of thanks speech was made by Manya Jain where she thanked the IP Press for the wonderful opportunity. She also thanked Mr. Ravi Pandey for taking out time to be the speaker and guide for the session. Lastly, Airmeet was thanked for providing the IP Press with a platform to hold the session without any technical glitches. Thereafter, the session was concluded.

Register for our next Workshop on Protecting your brand in the midst of Pandemic on 27th February 2021 from 2:00-3:00 PM (IST) by Ms Aashrika Ahuja.

Registration Link:

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