Intellectual Property Valuation, Exploitation, and Infringement Damages

A new edition of the trusted book on intellectual property

Intellectual Property simplifies the process of attaching a dollar amount to intellectual property and intangible assets, be it for licensing, mergers and acquisitions, loan collateral, investment purposes, and determining infringement damages.

Written by Russell L. Parr, an expert in the valuation/intellectual property field, this book comprehensively addresses IP Valuation, the Exploitation Strategies of Licensing and Joint Ventures, and determination of Infringement Damages. The author explains commonly used strategies for determining the value of intellectual property, as well as methods used to set royalty rates based on investment rates of returns.

This book examines the business economics of strategies involving intellectual property licensing and joint ventures, provides analytical models that can be used to determine reasonable royalty rates for licensing and for determining fair equity splits in joint venture arrangements.

Key concepts in this book are brought to life by presenting real-world examples of exploitation strategies being used by major corporations.

• Provides practical tools for and examines the business economics for determining the value intellectual property in licensing and joint venture decisions
• Presents analytical models for determining reasonable royalty rates for licensing and for determining fair equity splits in joint venture arrangements
• Provides a detailed discussion about determining intellectual property infringement damages focusing on lost profits and reasonable royalties.

RUSSELL L. PARR, CFA, ASA, is President of Intellectual Property Research Associates (www.ipresearch.com). He is an expert in determining the value of intellectual property. Mr. Parr's books about intellectual property value and management are published in Japanese, Korean, Italian, and English. He is dedicated to the development of comprehensive methods for accurately defining the value of intellectual property.

About the Author xi

Preface xiii

Acknowledgments xvii

Part I Introduction 1

1 Intellectual Property Is the Foundation of Value 3

2 Intellectual Properties Defined 20

3 Intangible Assets Defined 40

4 Business Enterprise 54

Part II Valuation 65

5 Valuation Principles 67

6 Cost Approach 75

7 Market Approach 87

8 Income Approach, Identifying Economic Benefit 95

9 Risk-Adjusted Income 113

10 Valuation Errors 130

11 Early-Stage Technology Valuation 142

12 Special Valuation Situations 155

Part III Exploitation 175

13 Exploitation Strategies 177

14 More on Exploitation Strategies 187

15 Licensing, Negotiations, and Agreements 213

16 Royalty Rates for Licensing 237

17 Use of the 25% Rule in Valuing Intellectual Property 272

18 Determining a Royalty Rate—an Example 291

19 The Magnitude and Meaning of Royalty Misreporting 305

20 Patent Aggregators 313

21 University Licensing 326

22 Joint Ventures 338

23 Intellectual Property Audit and Management 352

24 Organizing for the Future 372

25 Transfer Pricing 384

Part IV Infringement Damages 401

26 Lost Profits 403

27 The Entire Market Value Rule 434

28 Royalty Rates and the Georgia-Pacific Factors 448

29 Evolving Patent Damages 471

30 Trademark, Copyright, and Trade Secret Damages 484

Appendix A Accounting 496

Appendix B Economic Benefit, Timing, and Pattern 507

Appendix C Royalty Rate Data 530

Appendix D Risk and Uncertainty 598

Index 619

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