11. Mistakes to avoid
In the case of know-how, the value is necessarily lower than that of a patent, since the recipient of the know-how does not enjoy a monopoly of exploitation, and there is no guarantee that a third party is not already in possession of the same or similar know-how, or is not developing it independently, thus reducing the competitive advantage that the know-how is supposed to bring. The value of know-how is often estimated at between half the normal royalty rate for a patent (for example, when the know-how is granted on an exclusive basis to a beneficiary and associated with a patent) and the value of historical costs (i.e. the cost required to reconstitute this know-how, which the beneficiary saves).
The value of a portfolio of intellectual property titles (patents, trademarks, designs or a mix of these) is generally lower than the...
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Mistakes to avoid
Frequently asked questions
Bibliography
R. Goldscheider, J. Jarosz and C. Mulhern, Use Of The 25 Per Cent Rule In Valuing IP , LES News, December 2002
Websites
http://www.ipresearch.com/index.htm Intellectual Property Research Associates website, offering information on licensing rates by industry sector.
www.lesi.org Licensing Executives Society website
Acronyms and abbreviations
CAPM: Capital Asset Pricing Model
WACC: Weighted Average Cost of Capital
DCF: Discounted Cash Flow
EBITDA: Earnings Before Interest Taxes and Amortization
ENPV: Expected Net Present Value
ISO: International Organization...
Vocabulary
Due diligence: financial audit
Cash flow: surplus of financial flows generated by the operation of intangible assets.
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