ABSTRACT
In this chapter, we cover the subject of “intellectual property valuation.” A recent study on the “intangible asset market value”—by examining specifically the role of intangible assets in “corporate market capitalization” across a range of indices around the world—showed that companies that invest in intangible assets continually outperform the stock market. Thus, the share of intangible assets in the stock market capitalization of firms has steadily grown from 17% (in 1975) to 85% (in 2015). A firm’s intangible assets are comprised of intellectual assets (sum of the company’s intellectual property rights, trade secrets, and codified proprietary knowledge) and competitive intangibles (such as firm’s culture, innovative abilities, core competencies, unique buyer/supplier relationships, brand equity, reputation, and goodwill). Consequently, we start the discussion with the goals for intellectual property valuation. Next, we introduce the strategies for successful intellectual asset management. Then, we describe various topics including the general considerations, issues, challenges, and deliverables for intellectual property valuation. Finally, we elaborate the approaches for intellectual property valuation— both quantitative (cost-based, market-based, income-based, and option-based) and qualitative approaches—and summarize their advantages and disadvantages.
