Intellectual Property : Valuation, Exploitation and Infringement Damages 2012 Cumulative Supplement

by Parr, Russell L.

• ISBN13: 9781118037508
• ISBN10: 1118037502
• Format: Paperback
• Copyright: 2012-04-03
• Publisher: Wiley

Summary

Designed to simplify the process of attaching a dollar amount to intangible assets, Intellectual Property Valuation, Exploitation and Infringement Damages 2012 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.

Table of Contents

Note to the Reader: Chapters or sections not in the main bound volume (Intellectual Property: Valuation, Exploitation, and Infringement Damages: 978-0-471-68323-0) are indicated by “(New)” after the title. Material new to or modified in this supplement is indicated by an asterisk (*) in the left margin in the contents and throughout the supplement.

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 Distribution 112

27A.7 Conclusion 114

CHAPTER 33A THE MAGNITUDE AND MEANING OF ROYALTY MISREPORTING (NEW) 115

33A.1 Introduction 115

33A.2 “Why?” versus “How?” 116

33A.3 Math Errors: 5% Error Rate 119

33A.4 Royalty Rate Errors: 4% Error Rate 120

33A.5 Transfer Prices: 4% Error Rate 122

33A.6 Unreported Benchmarks and Milestones: 5% Error Rate 123

33A.7 Unreported Sales: 16% Error Rate 124

33A.8 Disallowed Deductions: 9% Error Rate 124

33A.9 Unreported Sublicenses: 17% Error Rate 125

33A.10 Questionable License Interpretation: 40% Error Rate 125

33A.11 Conclusion 126

CHAPTER 33B INTELLECTUAL PROPERTY AUDIT AND MANAGEMENT (NEW) 127

33B.1 Introduction 128

33B.2 Intellectual Property Is Important 128

33B.3 But Intellectual Property Is Frequently Mismanaged 129

33B.4 Why the Intellectual Property Dichotomy? 129

33B.5 The First Step: An Intellectual Property Audit 130

33B.6 From IP Audit to IP Management 132

33B.7 Insufficient Approaches 133

33B.8 A New Intellectual Property Management Paradigm 134

33B.9 Available Tools 134

33B.10 Benefi ts of Intellectual Property Management 135

33B.11 When to Do an Intellectual Property Audit 136

33B.12 How to Do an Intellectual Property Audit 138

33B.13 Software Solutions to Make the Job Easier 141

33B.14 Conclusion 144

CHAPTER 35A QUANTIFYING REASONABLE ROYALTIES: THE ENTIRE MARKET VALUE RULE (NEW) 149

CHAPTER 45 NEW MEASURE OF INFRINGEMENT DAMAGES—FUTURE DAMAGES (NEW) 161

45.1 Royalty Rate for Future Damages 163

45.2 What About Future Lost Profits? 174

CHAPTER 45A CONTINUALLY EVOLVING PATENT DAMAGES (NEW) 175

45A.1 Post-Verdict Royalty Rates 176

45A.2 Optimize Your Patented Technology or Lose It 181

45A.3 Litigation-Based Licenses 184

* CHAPTER 45B THE 25% RULE IS DEAD (NEW) 189

APPENDIX G MORE SAMPLE ROYALTY RATE INFORMATION (NEW) 193

APPENDIX H TRADEMARK ROYALTY RATES (NEW) 221

APPENDIX I PHARMACEUTICAL AND BIOTECHNOLOGY ROYALTY RATES (NEW) 239

APPENDIX J TELECOMMUNICATIONS ROYALTY RATES (NEW) 263

INDEX 299