9781118363065

Designed to simplify the process of attaching a dollar amount to intangible assets, Intellectual Property Valuation, Exploitation and Infringement Damages 2013 Cumulative Supplement provides practical tools for evaluating the investment aspects of licensing and joint venture decisions. It discusses the legal, tax, and accounting practices and procedures related to such arrangements and examines the business economics of strategies involving intellectual property licensing and joint ventures. Licensing professionals are provided analytical models to determine reasonable royalty rates for licensing and for determining fair equity splits in joint venture arrangements.

PREFACE xvii

PART I VALUATION 1

CHAPTER 1A INTELLECTUAL PROPERTY LANDSCAPE (NEW) 3

1A.1 80% of Corporate Value Is Intellectual Property and Intangible Assets 4

1A.2 Over Seven Million Patents 6

1A.3 Corporations Own the Most Patents 7

1A.4 All Industries Are

Patenting Inventions 8

1A.5 Trademarks 10

1A.6 Trademarks Are Supported with Huge Ad Spending 11

1A.7 Copyrights 12

1A.8 Trade Secrets 12

1A.9 Business of Licensing 15

CHAPTER 1B U.S. CONGRESS FLIRTS WITH DISASTER (NEW) 25

1B.1 Patent Litigation Venue 27

1B.2 Patent Infringement Damages 27

1B.3 Injunctions for Only Competitors 29

1B.4 Harming Our Only

Economic Advantage 31

CHAPTER 12A RISK-ADJUSTED CASH FLOWS (NEW) 32

12A.1 Required Rates of Return 33

12A.2 Capital Asset Pricing Model 36

12A.3 Build-Up Method 41

12A.4 Venture Capital Rates of Return 42

12A.5 Probability of Success 45

12A.6 Conclusion 49

CHAPTER 12B DEALING WITH RISK AND UNCERTAINTY IN INTELLECTUAL PROPERTY VALUATION AND EXPLOITATION (NEW) 51

12B.1 Risk versus Uncertainty 53

12B.2 Decision Analysis and Decision Trees 55

12B.3 Decision Tree Components and Conventions 56

12B.4 Monte Carlo Techniques 63

12B.5 Markov Chains 66

12B.6 Obtaining Information from Indirect Observation: Shadow Pricing 70

12B.7 Bayesian Analysis 72

12B.8 Option Pricing Models 75

12B.9 Limitations on Rationality in Decision Making: The Effects of Perception and Biases on Decision Making 78

12B.10 Conclusion 79

CHAPTER 14A RIGHTS OF PRIVACY, PUBLICITY, AND CELEBRITY PERSONA (NEW) 81

14A.1 Introduction 81

14A.2 Legal Underpinnings 84

14A.3 Trademark Rights 87

14A.4 Copyright 88

14A.5 Legal Uncertainties and Solutions 90

14A.6 A Photography Issue 91

14A.7 Conclusion 93

CHAPTER 14B INTELLECTUAL PROPERTY AND INTANGIBLE ASSET VOLATILITY (NEW) 95

PART II LICENSING 101

CHAPTER 27A ROYALTY RATES AND LICENSE FEES FOR TECHNOLOGY (NEW) 103

27A.1 Royalty Rates 104

27A.2 Per Unit Royalties 107

27A.3 Royalties Based on Profitability 108

27A.4 License Fees 109

27A.5 Medical Device Industry Royalty Rates 111

27A.6 Medical Device Industry License Fee Distribtuion 112

27A.7 Conclusion 114

CHAPTER 27B LICENSE FEES AND ROYALTY RATE FREQUENCY FOR TECHNOLOGY (NEW) 115

27B.1 Real Deal Royalty Rates 116

27B.2 Per Unit Royalties 118

27B.3 License Fees 119

27B.4 Conclusion 120

CHAPTER 27C ROYALTY RATES AND LICENSE FEES FOR PHARMACEUTICALS AND

BIOTECHNOLOGY (NEW) 121

27C.1 The Parties—Licensing between Corporations Dominates 122

27C.2 Royalty Rates 122

27C.3 License Fees 124

27C.4 Key Technologies 125

27C.5 Developmental Stages of Technology 126

27C.6 Conclusion 128

CHAPTER 33A THE MAGNITUDE AND MEANING OF ROYALTY MISREPORTING (NEW) 129

33A.1 Introduction 129

33A.2 “Why?” versus “How?” 130

33A.3 Math Errors: 5% Error Rate 133

33A.4 Royalty Rate Errors: 4%

Error Rate 134

33A.5 Transfer Prices: 4% Error Rate 136

33A.6 Unreported Benchmarks and Milestones: 5% Error Rate 137

33A.7 Unreported Sales: 16%

Error Rate 138

33A.8 Disallowed Deductions: 9% Error Rate 138

33A.9 Unreported Sublicenses: 17% Error Rate 139

33A.10 Questionable License Interpretation: 40% Error Rate 139

33A.11 Conclusion 140

CHAPTER 33B INTELLECTUAL PROPERTY AUDIT AND MANAGEMENT (NEW) 141

33B.1 Introduction 142

33B.2 Intellectual Property Is Important 142

33B.3 But Intellectual Property Is Frequently Mismanaged 143

33B.4 Why the Intellectual Property Dichotomy? 143

33B.5 The First Step: An Intellectual Property Audit 144

33B.6 From IP Audit to IP Management 146

33B.7 Insuffi cient Approaches 147

33B.8 A New Intellectual Property Management Paradigm 148

33B.9 Available Tools 148

33B.10 Benefits of Intellectual Property Management 149

33B.11 When to Do an Intellectual Property Audit 150

33B.12 How to Do an Intellectual Property Audit 152

33B.13 Software Solutions to Make the Job Easier 155

33B.14 Conclusion 158

CHAPTER 35A QUANTIFYING REASONABLE ROYALTIES: THE ENTIRE MARKET VALUE RULE (NEW) 163

CHAPTER 45 NEW MEASURE OF INFRINGEMENT DAMAGES—FUTURE DAMAGES (NEW) 175

45.1 Royalty Rate for Future Damages 177

45.2 What About Future Lost Profits? 188

CHAPTER 45A CONTINUALLY EVOLVING PATENT DAMAGES (NEW) 189

45A.1 Post-Verdict Royalty Rates 190

45A.2 Optimize Your Patented Technology or Lose It 195

45A.3 Litigation-Based Licenses 198

CHAPTER 45B THE 25% RULE IS DEAD (NEW) 203

APPENDIX G MORE SAMPLE ROYALTY RATE INFORMATION (NEW) 207

APPENDIX H TRADEMARK ROYALTY RATES (NEW) 235

APPENDIX I PHARMACEUTICAL AND BIOTECHNOLOGY ROYALTY RATES (NEW) 253

APPENDIX J TELECOMMUNICATIONS ROYALTY RATES (NEW) 277

APPENDIX K ELECTRICAL AND ENERGY ROYALTY RATES (NEW) 313

INDEX 347

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Intellectual Property : Valuation, Exploitation and Infringement Damages 2013 Cumulative Supplement

Intellectual Property : Valuation, Exploitation and Infringement Damages 2013 Cumulative Supplement

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