Intellectual Property Valuatoin Techniques
By Daryl Martin and David Drews- IPmetrics LLC

Introducation
Unlike many of the other assests found on a company’s balance sheet, the intangible assets, such as patents, trademarks and copyrights, are among the most difficult to quantify in terams of their value. It becomes further complicated to ascertain value when contemplating more obscure intangible assets, such as trade dress, trade sectets or software code. While difficult, the value of these assests can be accurately calculated via a number of industry accepted methodologies. The key to a successful analysis is to develop a comprehensive plan of action.
The initial point to determine when attempting to value intellectual propery or intangible assests is the rationale for undertaking the analysis in the first place. Why do you need to know the value of the assets? The most obvious situations are those in which a third party has an interest in the asset values. For example, the internal revenue service and othe tax authorities want a detailed understanding about the basis for any value determination used when allocating portions of the purchase price associated with ethe acquisition of other companies.
This issue has become even more important with the recent issuance of Statement of Financial Accounting Standard 142, Goodwill and Other intangible Assets, which changed the accounting treatment of certain intangibles acquired through business combinations. Instead of a more-or-less blanket treatment of acquired intangibles that featured a stated amortization period, many of these assets will now be carried on the balance sheet at fair value and subjected to periodic impairment testing. Similarly, the tax authorities will be quite interested in understanding how the value of any donated property, including patents and related intangibles, was calculated.