ABSTRACT
With its origins in the IP litigation of the 1980s and 1990s,
the valuation of IP (primarily patents) in the United States was
initially limited to damages calculations in legal cases involving
claims such as patent infringement. With the introduction of
tax planning involving IP, such as transfer pricing and patent
donations, the valuation of intangibles became critical in non-
litigation circumstances aswell. Companieswere required to include
in their tax reporting the fair market value (FMV) of IP involved
in transactions, such as the intercompany transfer of IP or the
donation of a patent to a university. New accounting rules related to
business combinations in the United States, introduced in the early
2000s, expanded the need for IP valuations evenmore, as companies
were now required to report the Fair Value (FV) of intangibles that
were purchased with a target in a mergers & acquisitions (M&A)
deal. These “compliance” situations-litigation, accounting, and tax
reporting — carry with them a high degree of scrutiny by the court
or regulating authorities, and require a third-party, IP valuation
expert’s opinion in the form of a report or testimony.
