Intellectual Property - Details

Intellectual Property: A part of Intangible Assets which means a non monetary asset that manifests itself by its economic properties. It does not have physical substances but grants rights and privileges to its owner that usually generate income.

The term “Intellectual Property” refers to patents, trademarks, copyrights, and trade secrets or know-how.

This is a special classification of intangible assets and is unique because the owner of intellectual property (IP) is protected by law from unauthorized exploitation of it by others.

A business enterprise that owns IP can either internally utilize its benefits or transfer interests in the property to others who will exploit it.

Types of Intellectual Property

An intellectual property can be either identifiable or unidentifiable.Marketing-Related Intangible Assets

  • Customer-Related Intangible Assets
  • Artistic Related Intangible Assets
  • Contract-Based Intangible Assets
  • Technology-Based Intangible Assets


Basis of Intellectual Property Valuation
  • Market Value Basis of Valuation
  • Other than Market Value

Purposes of Intellectual Property ValuationLicensing

  • Collateral-Based Financing
  • Accounting Requirement
  • Litigation
  • Financial Reporting
  • Intercompany Transaction
  • Strategic Alliances
  • Infringement Damages
  • Bankruptcy
  • Economics Damages

Valuation Approaches and Methods

All intellectual property valuation methods fall within one of the three valuation approaches.

  • Market Comparison Approach
  • Income Approach
  • Cost Approach


Intellectual Property refers to creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce. IP is divided into 2 categories

  • Group1 Industrial Property which includes
  1. Trademark is a distinctive sign or indicator used by an individual, business organization, or other legal entity to identify that the products or services to consumers with which the trademark appears originate from a unique source, and to distinguish its products or services from those of other entities.
  2. Trade Name also known as a trading name or a business name is the name which a business trades under for commercial purposes, although its registered, legal name, used for contracts and other formal situations, may be another.
  3. Invention (Patent) is a set of exclusive rights granted by a state (national government) to an inventor or their assignee for a limited period of time in exchange for a public disclosure of an invention.
  4. Trade Secret is a formula, practice, process, design, instrument, pattern, or compilation of information which is not generally known or reasonably ascertainable, by which a business can obtain an economic advantage over competitors or customers.
  5. Industrial Designs is a combination of applied art and applied science, whereby the aesthetics, ergonomics and usability of products may be improved for marketability and production.
  6. Geographic Indication of Sources s a name or sign used on certain products which corresponds to a specific geographical location or origin (e.g. a town, region, or country). The use of a GI may act as a certification that the product possesses certain qualities, or enjoys a certain reputation, due to its geographical origin.
  • Group2 Copyright
  1. Copyright which includes literary and artistic works such as novels, poems and plays, films, musical works, artistic works such as drawings, paintings, photographs and sculptures, and architectural designs. Rights related to copyright include those of performing artists in their performances, producers of phonograms in their recordings, and those of broadcasters in their radio and television programs.

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