What role do intangible legal assets (IP) play in business valuation? What are the procedures for this?
Quite fundamentally, the valuation of intangible legal assets of a company is a much discussed and extremely complex topic. This is especially true in the area of brand valuation. The value of trademarks depends, among other things, to a not inconsiderable extent on the awareness of the trademark among the relevant public in the market. For the valuation of intangible legal assets, a number of methods have been developed by auditors in the past according to which the value of different intangible assets can be determined. These methods are to be used on a case-by-case basis. The choice of method to be applied in a specific case is also determined by the type of property rights and intangible legal assets present in the company.
It is very difficult to give a generalized answer to the question of how IP is valued in a company. In this context, it is of utmost importance to conducta thorough IP due diligenceas a first step in order to accurately determine the inventory of intellectual property rights in the company. This synopsis of the inventory subsequently enables the adequate choice of method for the subsequent evaluation of the legal assets.
In the field of inventions and other registrable work results, it is highly advisable to apply for property rights in the name of the company. By registering as a property right, one achieves a monopolization of the respective rights. For technical gauges that contain innovations compared to the current state of the art, the application and registration as a patent or utility model is possible. Other (creative) work results can, depending on their type, be given legal protection by applying for registration as a trademark or as an industrial design (design).
Naturally, it becomes more difficult where work results are not registrable. This applies in particular to copyrighted works and technical know-how that does not reach the level of invention required for a patent application. Here, protection of intellectual property against third parties can usually only be effectively achieved through comprehensive non-disclosure agreements. When drafting such non-disclosure agreements, particular care must be taken to provide for a reversal of the burden of proof in the event of unauthorized disclosure of secret information. Such a provision imposes the obligation on the contracting party to prove, in the event of a dispute, that the information it disseminated was already known to the public beforehand.
Following a change in case law, the registration of trademarks for retail services has been possible for several years. It is only necessary to specifically name the goods with which retail trade is carried out within the scope of the trademark application. This was an important development for young but established Internet companies such as zalando or mytheresa, which have invested a lot of money — in some cases with extensive advertising activities — in building up their brand. This allows you to obtain comprehensive protection for the trademarks for the services offered.
For such companies, it is usually difficult to have their value-added content protected by registered rights. Creative ideas, designs of online sites, business plans and financing structures are — as far as they are characterized by a creative performance — possibly protected by copyright, possibly also under aspects of know how protection. In this respect, it must be assessed in each individual case whether copyright or know-how protection exists and how valuable the underlying ideas are. The monetary valuation of copyrights and business concepts is therefore extremely difficult and time-consuming.
3 a): Are there any new developments in IP? International?
Due to the outstanding importance of intellectual property rights in commercial transactions, this area is constantly characterized by new developments. The IP area in particular is subject to strong European law influences as part of the efforts to harmonize law in the European Union.
At present, the discussions on the amendments to the Trademark Directive as well as the fundamental adoption of the Community patent are occupying the expert bodies. The amendments to the Trademark Directive currently intended by the EU Commission and still controversially discussed are intended to bring about even greater harmonization of national trademark law in the individual member states and thus further increase legal transparency in this area. — In addition, at the end of 2012, after years of wrangling in Brussels, the introduction of the Community Patent was adopted for the EU. The future Community patent, like the Community trademark, is a single property right with uniform effect in the member states of the EU. However, unlike the Community Trade Mark Regulation, which applies to all member states, Italy and Spain do not participate in the Community Patent system. National patent applications will still be required in these countries.