Methods of Valuation of Intellectual Property Assets

Methods of Valuation of Intellectual Property Assets

Intellectual Property Rights, since their inception, are a matter of concern for international trade and development. The Trade-Related Aspects of Intellectual Property Agreement was imbued with the Western philosophy of trade and commerce which, arguably, made it difficult for the developing countries to take optimum advantage of their skill and resources. Nonetheless, it was not because of Western philosophy but because of a lack of awareness in the field of Intellectual Property which hampered the ideal utilization of their resources. Many innovators develop ideas and processes for their practical implementation but rarely think of commercializing the same. It is this lack of commercialization of Intellectual Property which has hindered the growth of developing countries like India. There are various ways in which innovators can invoke the commercial power of their innovations or creations. However, with commercialization, comes profit and with profit comes risk. It is not only commercialization but how, the innovator, deals with the associated risk that counts. For that, one must assess the market, and research the trends that might affect or add an advantage to the innovation in question. Methods such as the cost approach, the market approach, and the income approach exist for Intellectual Property Valuation. Gone are the days when Intellectual Property assets were harmless in their appropriation, today they are the concern of life and death. Hence, the abovementioned techniques are necessary for the effective commercialization of Intellectual Property assets. This paper is an attempt to shed light upon the importance of commercialization of Intellectual Property assets, and diverse modes of Intellectual Property Valuation. While doing so, the paper will focus on why the concept of Intellectual Property Valuation has still not achieved its potential and what could be the way out.