Page 37 - QUEST-IP (Final)_Neat

The primary methodologies for IP valuation are as follows:
(i) Income method: Being a widely common method, this values
the IP assets on the basis of the sum of income that it is anticipated
to generate. This method is fairly simple and straightforward as it
would evaluate the future income streams, the duration of income
streams and risks associated thereto that can be used to get discount
rates related with the income stream generation.
(ii) Market method: This method is based on comparing the
actual price paid for transfer of rights to an identical IP asset under
analogous circumstances. This method is also simple, being based on
market information and is frequently used for obtaining approximate
values for use of the IP asset in calculating rates of royalty, tax, etc.

(iii) Cost method: This method calculates the cost of an identical
or exact IP asset and is useful when the asset can be produced easily
and its economic benefits cannot be precisely ascertained. It should
be noted that this method does not take into account the wasted
costs or consider any novel or distinctive attribute of the asset.
It is evident that a robust stance of IP and a strong IP strategy certainly
leads to more opportunities for businesses with the anticipation
of attainable financing, scalability, novelty and growth, including
maintaining a distinctive, valuable and protectable brand. Therefore, it is
equally imperative that such valuations be conducted meticulously and
under expert supervision.

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