Section 05

Monetary Evaluation of IP Rights

Fabry, B., Ernst, H.
How to make investors understand the value  of IP assets
Les Nouvelles 201, 2005

The situation of protective rights has an immediate influence on the economic situation of a company, particularly with regard to ROI and profitability. Therefore, investors are well-advised to carefully look at these factors. For companies this means that they have a tool in their hands that adds to their attractiveness. For proof of evidence of a positive patent situation, success factors – so-called “Key Success Indicators“ have proved to be useful. In this context, statistical data may provide valuable assistance, provided their statements are critically scrutinised. However, more efficient are success factors that allow a benchmarking of the considered company in comparison with its competitors. This purpose is best served by gathering objective information that is available to anyone from public databases, and by calculation of different parameters, particularly of relative patent strength as the product of patent activity and patent quality of a company in a considered segment. Patents and trademarks, which are often summarised as „IP assets“, constitute an immaterial asset and can therefore immediately contribute to corporate performance, provided that their value may be determined in a sufficiently objective manner. This, however, is only possible if company and investor are in agreement about the general conditions on which the valuation was carried out.

Fabry, B., Ernst, H.
The value of IP from the perspective of an investor
Notice of German Patent Attorneys („Mitteilungen der Deutschen Patentanwälte“) 126, 2007

The property right situation has a direct impact on a company’s economic situation especially when considering return and profitability. Therefore, investors are well advised to analyze these factors carefully. For companies, this means having a tool tha underlines their attractivity. In order to prove a positive patent situation, success factors – so-called Key Success Indicators – have come in handy. Thereby, statistical characteristics can be a great support when its statements are questioned critically. However, success factors which allow a Benchmarking of the respective company towards its employees have proven to be even more efficient. Objective information which are accessible on public data bases and which enable a calculation of different parameters especially the relative patent strength as result of patent acivity and patent quality of a company in a certain segment are suitable. Patents and trademarks which are collectively often called “IP Assets” are an immaterial asset and can, thereby, contribute to a company’s value provided that the value was determined sufficiently objective. However, this is only possible when companies and investors agree on the framework which formed the basis for valuation.

Fabry, B.
IP Asset Management
Notice of German Patent Attorneys („Mitteilungen der Deutschen Patentanwälte“) 399, 2008

Patents and trademarks are not only indispensable prohibitive rights for the protection of R&D investments but they also gain more and more importance as immaterial values. In this regard, they do not have to be judged or maintained differently from shares and real estates. The portfolio optimization must thereby be orientated on the strategic value of contained assets which should permanently be higher than the costs involved through the maintenance. Therefore, the planning of maintenance costs for the portfolios has a significant meaning. This presupposes an exact knowledge of influences and disturbances and requires not only a careful observation of cost development but also its detailed analysis in order to be able to punctually face off undesired developments with adequate actios.

Fabry, B., Kouskoutis, M.
Shipwreck instead of treasure hunting
Notice of German Patent Attorneys („Mitteilungen der Deutschen Patentanwälte“) 345, 2011

This essay sums up the main changes in the activation of self-made property which are derived from the Accounting Law Modernisation Act and critically examines the handling of § 248 HGB. As an alternative, the capitalization of property right portfolios through Sale and Lisenceback in the course of establishing business IP-companies („Philipps-Modell“) is introduced.