Cash in on intellectual property
instances the valuations are used in simply attributing a value to intellectual property for the purposes of a transaction or transfer pricing. South African companies are also looking more actively at issues such as intellectual property holding structures and the benefits that these can offer. Financial reasons. It is not uncommon for companies to use intellectual property for the purposes of raising capital or securing debt. Using intellectual property to raise capital or secure debt is not new, even in SA where a number of companies have bundled together portfolios of intellectual property, typically trademarks, for these purposes.
Less common though is the use of royalty income as a basis to issue bonds. The most prominent example of this is the now famous “Bowie Bonds” where the royalty stream that was flowing from David Bowie’s music rights was used as security to issue bonds. Legal reasons. In addition to strategic, transactional, tax and financial reasons, valuations of intellectual property may also be required for legal reasons.typical examples of this are conducting valuations for the purposes of determining damages or reasonable royalties that are to be paid in lieu of damages. Damages aim to compensate a plaintiff for the economic loss that the intellectual property holder has suffered as a result of the unauthorised use of intellectual property.
The economic benefit that has been denied to the holder of intellectual property needs to be quantified.
Intellectual property valuation is becoming more commonplace as companies look to extract value from and recognise the value of their intellectual property. There is also a growing recognition that these assets hold substantial value but that specialist skills are required for the management and valuation of these assets.