The importance of carrying out IP Audits has been discussed in
previous articles. This article explains the brand valuation
component of IP Audits, and how brand valuations help businesses to
manage risks and attract investment.
A brand valuation provides a sound and defensible estimate of
what a brand is worth. The determination of brand value depends on
the trademark rights or other IP rights that protect it. Trademark
rights provide an insurance policy against devaluation of the brand
by infringement or dilution. Furthermore, a brand valuation done
while the brand is not being threatened will later help in the
assessment of damages should infringement or devaluation occur. In
other words, strike while the trademark is hot.
Brand valuations are part of keeping a company's IP strategy
in line with its overall business strategy. For example, a company
might successfully establish its brand in a number of countries,
but if it overlooks registration in any of those countries, the
value of the brand will be diminished by risks of depreciation or
infringement. And the financial repercussions may well spread
beyond the countries where registrations were overlooked.
Carrying out a brand valuation has a number of benefits. First,
is the informative benefit to brand management. Once a company
gains an appreciation of the actual financial value of its brand,
and how that value compares to its peers, then the
organization's attention is more readily mobilized to building
additional value in the future. ("You can't manage what
you don't measure.") Second, the data that was collected
in carrying out the brand valuation will also provide essential
input to brand development strategies. The information collected
can be used to assess options and create a business case for change
where appropriate. Finally, brand valuations play a direct role in
other financial decisions, such as use as collateral or assurance
in financing applications, bargaining strength in corporate sale
negotiations, setting licensing fees, or quantifying appropriate
intercompany royalty payments for multi-company organizations with
centralized brand ownership.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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