A practical and useful resource for valuing trademarks The Second Edition of Trademark Valuation is a fresh presentation of basic valuation principles, together with important recent changes in worldwide financial reporting regulations and an update on the current worldwide legal conditions and litigation situation as they relate to trademarks.
A new section discussing issues surrounding valuation of counterfeits and the economic effects of trademark counterfeiting is included in this informative Second Edition.
Considers methods to determine the real value of your trademark and exploit its full potential Offers dozens of case studies that illustrate how to apply valuation methods and strategies to real-world situations Communicates complex legal and financial concepts, terms, principles, and practices in plain English Discusses GATT, NAFTA, emerging markets, and other international trademark considerations
Preface xi Acknowledgments xiii Chapter 1 The Nature of a Trademark 1 Trademark Defined 2 The Legal Underpinnings of Trademarks 17 Trademarks, Brands, and the Products and Services They Represent 20 Summary 29 Chapter 2 Valuation Basics 31 The Business Enterprise 31 Valuation Principles 46 Property and Rights to Property 50 Premise of Value 51 Valuation Methods 57 Summary 59 Chapter 3 Using Financial Information 61 Financial Reporting 62 Financial Statements and Value: Disaggregating S&R's Assets 65 Tax Issues 77 Summary 81 Chapter 4 Trademark Valuation 83 Cost Method 84 Estimating Reproduction and Replacement Cost 87 Using the Cost Method for Trademarks 90 Market Method 94 Using the Market Method for Trademarks 98 Income Method 101 Using the Income Method for Trademarks 106 Summary 106 Chapter 5 Trademark Economic Benefit 107 Future Economic Benefit 107 Quantifying Economic Benefit 116 Direct Techniques 118 Indirect Techniques 133 Summary 137 Chapter 6 Income Method: Economic Life and Risk 139 Defining Economic Life 140 Trademark Economic Life and Pattern 144 Survivor Curves and Studies of Historical Life 154 Forecasting Growth 157 S-Curves in General 161 Elements of Risk 164 Summary 171 Chapter 7 The Income Method: Putting It All Together 173 Trademark Valuation by Residual 173 Multiple Exploitation Scenarios 184 Valuation Based on Income Allocation 186 Summary 187 Chapter 8 Trademark Licensing Economics 189 Licensing Economics 189 Some General Thoughts 193 Royalty Quantification 195 Quantification Techniques 197 Scoring and Rating Techniques 201 Discounted Cash Flow Model 205 Dividing the Economic Benefit 208 Another Analytical Technique 210 Rules of Thumb 211 Summary 212 Chapter 9 Quantification of Harm in Trademark Enforcement Cases 213 Civil Trademark Enforcement Actions 214 Monetary Recovery in Civil Actions 217 Enhancement of Monetary Recovery 227 Valuing Counterfeits for Purposes of Criminal Sentencing 232 Summary 234 Chapter 10 Special Trademark Valuation Situations 235 Trademarks in Finance 235 Trademarks in Bankruptcy 238 Valuation Directions 244 Trademarks and Ad Valorem Taxes 248 Summary 249 Chapter 11 Global Trademark Issues 251 Trademark Holding Companies 252 The Scourge of Trademark Trolls 253 International Valuation Standards 255 Counterfeiting: A Worldwide Contagion 257 Political/Investment Risk 259 Summary 261 Appendix A Basic Investment Principles 263 A Certificate of Deposit Example 263 The Arithmetical Foundation 266 Appendix B Theoretical Foundations for the Determination of a Fair Rate of Return on Intellectual Property 269 Appendix C Investment Rate of Return Requirements 271 Investment Risk 272 Required Rate of Return Components 273 Rate of Return Models 274 Arbitrage Pricing Theory 278 Venture Capital 279 Weighted Average Cost of Capital 281 References 284 Appendix D Predicting Sales and Revenues for New Ventures with Diffusion Models 285 New Product Sales Forecasting Models: Product Diffusion 286 Types of Product Diffusion Models 288 The Bass Model 290 Caveats of the Bass Model 293 Summary 294 References 295 Appendix E Dealing with Uncertainty and Immeasurables in Trademark Asset Valuation 297 Elements of Valuation Analysis 298 Decision Analysis and Decision Trees 301 Monte Carlo Techniques 309 Obtaining Information from Indirect Observation 317 Option Pricing Models 323 Good Enough Decision Making 325 Summary 332 About the Authors 333 Index 335
GORDON V. SMITH is Chairman Emeritus of AUS Inc., a multidiscipline consulting and market research firm, a member of the Board of Trustees of the University of New Hampshire School of Law, and Distinguished Professor of IP Management at the law school's Franklin Pierce Center for Intellectual Property. During his long consulting career, he has advised clients on the value of intellectual property and closely held stock and has consulted in support of transactions, litigation, and tax-related matters. He is the author and coauthor of several books on IP valuation and exploitation strategies. An active international lecturer, Smith is Chair of the Advisory Board of the Licensing Economics Review, as well as an Adjunct Professor at the National University of Singapore (Division of Engineering & Technology Management). Mr. Smith earned an A.B. degree from Harvard University in 1959. SUSAN M. RICHEY is a Professor of Law at The University of New Hampshire School of Law (formerly the Franklin Pierce Law Center) and a former Associate Dean of the law school. She recently completed an appointment as Visiting Distinguished Scholar with the International Economic and Commercial Law Group at the University of Limerick in Ireland. Richey has been involved in numerous programs teaching intellectual property concepts to nonlawyers, including workshops sponsored by the World Intellectual Property Organization and UNITRAD, the trainingarm of the United Nations. Active in the International Trademark Association (INTA), she served a three-year appointment as an editor of The Trademark Reporter, a scholarly publication of INTA, a two-year appointment as Chair of INTA's Panel of Neutrals, and she currently serves on INTA's Academic Committee.
