After reading Jackie Hutter’s (author of the IP Asset Maximizer Blog, a great read) comment under Joff Wild’s post on IAM, I hastily posted a response (comment #15). Subsequently, I read some other responses, and after giving Jackie’s words some more thought, I slightly digress from my initial response.
I still believe transparency is the key to standardizing IP valuation. However, when I speak of such valuation, I do so in the transactional context. Jackie’s words, “valuation of intangible assets primarily by what a willing buyer would pay on the open market pre-supposes that corporate intangibles derive value only from their transactional value,” are true. There really is more “value” than a price tag placed on IP in the buy/sell context. As she points out correctly, that value is derived from “the market share improvements associated with brand name recognition and high corporate reputation.” In this light, a company derives substantial worth from strategic preservation of some IP, especially that which is core to a corporation’s operations. This IP brings value to the table that cannot, and will not, be measurable by any derivative measurement, rating system, or scientific formula.
When I speak of transparency and its crucial importance to the burgeoning IP market, I do so from an investment perspective. However, as a corporate M&A attorney, I cannot forget the inherent corporate value resulting from the competitive advantage on which a company can capitalize by efficiently using (instead of licensing or selling) certain IP.
Therefore, from the IP valuation lens, we should be aware that IP has more than one “value”, and therefore more than one valuation method. It might be easiest if the IP community begins to differentiate the two by using “value” for the transactional context and “worth” for the corporate context.