Setting the Standards:

Advances and Challenges

in IP Valuation

Presented by:
Weston Anson
CONSOR Intellectual Asset Management
800.454.9091
www.consor.com
 The Challenges

™Accurately valuing your company’s most

valuable assets when:
} Methodologies are in flux
} Different standards are being set by different
groups
} And, IP and intangible asset values constantly
change

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 The Advances are Real

™New standards for accounting and

business combinations
™Regular tests for impairment
™AICPA and USPAP standards
™General agreement on three main
valuation methodologies:
} Cost, Income, Market Comparables
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 Many Challenges Remain

™How does one define value for a piece of

IP or an intangible asset?
™Can there be a single set of standards?
™Can a single methodology ever work best?
™Can an accountant ever learn to actually
value IP or intangible assets?

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 IP Can Have Multiple Values Simultaneously:
And They Can All Be Correct!!

™Example - A fully developed patent:

} Value to owner if commercialized: $100m
} Value to owner if held defensively: $ 50m
} Value to competition: $ 50m
} Value to infringer: $ 25m

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 Therefore, CONTEXT Determines IP Value

™Value to whom, and why:

} Tax } Litigation
} Defense } Sale
} Commercialization } Bankruptcy
} License / cross license } Divorce

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 Why Accountants Can’t Measure IP Value

™Accountants track past transactions with outside

parties
™Financial statements report on historical data
™This makes accounting inherently backward-
looking
™Two significant limitations result:
} Accounting doesn’t value IP that is internally
generated
} Accountants are ill-equipped to estimate future value
of IP and intangible assets

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 Jurisdictional Alphabet Soup

™Cross-border transactions pose valuation issues

when different standards are recognized
™Therefore, geography (along with time) becomes
another contextual valuation issue
™IVSC, AICPA, IFRS, NACVA, USPAP, IACVA,
etc. are all setting valuation standards
™Notably, none of these groups are intellectual
property based organizations

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 Advancing Our IP Infrastructure

⇒Until now!
The new LESI Valuation Standards Committee
™Adopt valuation standards that have the
input of IP professionals, not just
accountants
™Value all IP, not just acquired IP
™Concentrate first on bringing uniformity to
the five key IP geographies: EU, US,
China, Japan, Korea
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