Challenges in Valuing Intellectual Property essay
In the contemporary business environment, intellectual property rights play an extremely important part because they contribute to the use of intellectual property and protection of interests of owners of intellectual property rights. At the same time, the problem of the adequate valuing intellectual property arises because owners of intellectual property rights cannot always define accurately the value of their intellectual property. As a result, often intellectual property rights are sold at low price, while new owners of intellectual property rights have gained huge profits using the full potential of the intellectual property and discovering the real value of the intellectual property. Therefore, valuing intellectual property may face a number of challenges, which owners of intellectual property have to overcome to value their intellectual property properly.
One of the challenges in valuing intellectual property is getting legal license, patents, copyrights, and other documents that grant owners of intellectual property with the intellectual property right because without this right the intellectual property is worthless (Moores, 2005). In this regard, owners of intellectual property right may need the legal assistance to obtain patents, trademark, licenses and other legal issues related to obtaining the legal ground for the intellectual property right. Legalizing the intellectual property right lays the foundation for the valuing and commercial use of intellectual property, whereas the lack of the legal ground deprives actual owners of intellectual rights of the possibility to use their intellectual property for commercial purposes, while other individuals can use their intellectual property or they may even legalize it outpacing actual owners of intellectual property.
Another challenge is selecting a competent appraiser because financiers, accountants, managers and other professionals, who can work with intellectual property may not need to appraise it properly that may lead to under-estimation or over-estimation the value of the intellectual property (Mallor, et al., 2007). In fact, the adequate assessment of the value of intellectual property is extremely important because any business plan needs the adequate assessment of the main assets, while the intellectual property may comprise an important asset of any company or business. Therefore, professionals dealing with intellectual property should appraise properly the value of intellectual property.
Often it is difficult to find comparable transactions to establish the proper value of the intellectual property because often intellectual property is innovative (Nimmer and Nimmer, 1997). In fact, owners of intellectual property need to compared their intellectual property to other products or services that use the similar intellectual property to value intellectual property properly. Through comparison, owners of intellectual property may set the value of their intellectual property that will be competitive in the market. Otherwise, they face a risk of under-estimating or over-estimating the value of their intellectual property.
Finally, the adequate assessment of risks associated with the intellectual property and exercising intellectual property rights. Any property or asset is associated with certain risks, while the commercial use and business development involving intellectual property involves inevitably various risks, which owners of intellectual property should take into consideration. In such a way, they can develop business strategy which takes into consideration actual and potential risks. In such a situation, the value of intellectual property will be defined more objectively compared to the property assessed without taking into consideration risks because risks may outweigh potential return on investments in the development of intellectual property business.
Therefore, valuing intellectual property may face a number of challenges mentioned above and owners of intellectual property rights should overcome them.
