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Friday, September 3, 2010


Value is defined as “a fair return or equivalent in goods, services, or money for something exchanged.” [1] A principle of technology valuation is that the optimum value of a technology transferred is a fair percentage of the cash flow generated by the competitive advantage of the technology.[2]

The value of intangible assets relative to the value of physical and financial assets has continuously increased since the early 1980s.[3] One measure of this increase is the market-to-book (M/B) value for the S&P 500 companies. During the 1970s, the M/B ratio for the S&P 500 companies hovered around one; by 2000, the M/B ratio was over six. This means that in 2000 for every $6 of market value less than $1 was comprised of physical and financial assets while the remaining $5 (83.3%) was comprised of intangible assets.[4] For many companies, the ratio of intangible assets to physical and financial assets is considerably higher. Smith and Parr have calculated the following percentages of intangible assets for the following companies: Johnson & Johnson (87.9%); Proctor & Gamble (88.5%); Merck (93.5%); Microsoft (97.8%); and Yahoo! (98.9%).[5]

The importance of intangible assets has created an urgent need to value these assets in many contexts including intellectual property management, mergers and acquisitions, sales, corporate takeovers, joint ventures, and licensing. In the context of intellectual property management, intangible asset valuation is necessary to establish performance measures and evaluate business strategies.[6] In the context of acquisitions, sales, and joint ventures, intangible asset valuation is necessary to determine the value of a company to a buyer or seller and the value of partners' contributions to collaborative undertakings.[7]

It is thus evident that the importance of intangible assets has created an urgent need to value these assets in many forms including intellectual property management, acquisitions, sales, joint ventures, and licensing.[8]

The key to appraising intangible asset values is the identification of exactly what is being valued and the context and conditions under which that value will be conferred. Mr. Anson states that when valuing intellectual property, “the devil is in the concepts, not the details.” He posits that “the details will follow the conceptual breakthrough needed to ensure an accurate valuation”[9] Traditional valuation methods are based on functions of cash flow depending on the type of business and industry.[10]

A word of caution. Not all intangible property per se is intellectual property. There are in essence, two types of intangible properties – the first is intellectual property asset, over which the owner has a legally enforceable right to appropriate the benefits derived. This type includes patents, copyrights, trade secrets, and trademarks. These can also be called true assets, by looking solely from the benefit derived angle. The second type of intangible asset is not a true asset because the owner has no legally enforceable rights in the asset. This type includes assembled workforce, employee training, management skill, and customer patronage. These can be referred as intangible advantage.[11] Indeed a pressing advantage that intellectual property assets have over intangible assets is that they can be transferred, sold, bought, traded etc at will.

There lies an inherent difference in the valuation of tangibles and intangible assets. First, the public trading markets that exist for financial and physical assets do not exist for intellectual property assets. Although exchanges of intellectual property assets occur every day in every industry, these exchanges are sporadic and specialized, motivated by strategic advantages unique to the firms involved. Second, the terms and conditions of intellectual property transfers vary widely. Lawyers and licensing professionals negotiate and craft agreements to suit the special needs of their clients, and rarely are two agreements identical. Third, intellectual property assets are inherently dissimilar, and the dissimilarity is sometimes required by law. For example, patents must be novel and non-obvious compared to prior art;[12] copyrights must be original works of authorship;[13] and trademarks must be distinctive.[14] Fourth, and most important, the details of intellectual property transfers are rarely made available to the public. Again, the principal motivation for intellectual property asset exchanges is strategic advantage, and firms will not publicize exchange details which could reveal strategy objectives.[15]

As value is inherently subjective and valuation methods inherently uncertain, some criticize valuation, especially intellectual property valuation, as not worth the time and money,[16] however Richard Razgaitis suggests that valuation requires an intermediate perspective between certainty and ignorance, and this requires the exercise of skill, experience, and judgment.[17] Aristotle has also noted that it is a sign of an educated mind not to expect more certainty from a subject than it can possibly provide. Delving upon valuation techniques it is to be noted that there are three basic techniques, and these have been elaborated below.

The cost method compensates the seller of an asset with an equivalent of the cost to replace the asset with an identical and an equivalent asset.[18] The underlying assumption of this method is that the cost invested to develop an asset is commensurate with the benefit it will provide during its functional life. The basic disadvantage of this method is that cost does not equal value and cost of an asset to the seller is antagonistic to the benefit achieved by the buyer. Indeed, Daniel suggests that empirical studies, which generally conclude that only a very few patents yield high returns while the rest are relatively worthless, confirm the disconnect between the cost of creating an intellectual property asset and its value.[19]

There are three cost concepts, however, which are useful in considering the value of intellectual property: sunk costs, opportunity costs, and switch-over costs.
  1. Sunk costs are those that have been invested by the owner of the asset to create the asset. These are irrelevant to the buyer as the cost of developing the asset cannot be passed on to the buyer if the asset is of no use to him.
  2. Opportunity cost is a direct function of the cost to develop the asset independently or the cost to acquire the next best asset from another party.
  3. Switch-over costs are the costs to adopt and utilize the intellectual property asset.
       High    Low    Medium  Maximum
             Effort   Effort  Effort 
               Low    Medium   High  
     Medium  Effort   Effort  Effort 
             Minimum   Low    Medium 
    Minimum  Effort   Effort  Effort 
               Low    Medium   High  
                EXPECTED VALUE OF    

Only if the buyer perceives the value of the intellectual property asset to be greater than the buyer's opportunity and switch-over costs will the buyer negotiate with the seller.[20]

The market method values an asset based upon comparable transactions between unrelated parties. Four basic requirements must be met before the market method can be used to value an asset:
  1. an active market must exist for the asset;
  2. there must be a sufficient number of similar asset exchanges in the recent past;
  3. price information on similar asset exchanges must be available to the public; and
  4. the exchanges must be between independent parties.[21]

This method too has its disadvantages. Firstly, as noted above, there is no public trading market for intellectual property assets, the terms and conditions of intellectual property asset transactions vary widely, intellectual property assets are inherently dissimilar, and the details of intellectual property asset transactions are rarely available to the public. Secondly, additional factors that affect the comparability of intellectual property transactions include the relative balance of power between the buyer and seller, industry concentration, market size, barriers to market entry, the growth outlook for products incorporating the intellectual property asset to be valued, and anticipated new product introductions.

However, despite the lack of closely comparable transactions, the market method can still serve as a useful benchmark of intellectual property value. For example, information on the range of royalty rates for a type of intellectual property asset in a given market can be used to calculate an average asset value for comparison to the asset under investigation.[22]

The income method values an asset based upon the present value of the net economic benefit (net future income stream) expected to be received over the life of the asset. There are four parameters which must be quantified to use the income method:
  1. the amount of net income the asset is expected to generate;
  2. the time period over which the income is expected to be received;
  3. the present value discount rate for future income (a risk free rate of return plus an inflation adjustment); and
  4. the risk of realizing the future income (a risk premium adjustment).[23]

There are four methods that can be used to calculate net income under these circumstances: price premium, cost savings, relief from royalty, and residual earnings. However, the use of this method again raises the problem of the incomparability of intellectual property transactions.[24] This method is considered in most circles as the most appropriate.[25] Other methods include the amortization[26] of intangible assets.[27]


The 25% rule states that companies which buy or license an intellectual property asset must pay the owner 25% of the gross profits. This method solves some problems as it is known that companies generally spend up to 33% of their profits on discretionary research.[28] The rule has inherent disadvantages as the rule fails to consider the number and utility of alternative technologies and that it is at odds with empirical surveys which indicate that a majority of licensees would be unwilling to pay more than 10% of gross profits in royalties.[29] In addition, the 25 percent rule cannot quantify the adjustments necessary for varying degrees of investment and risk on the part of licensors and licensees, and that the use of gross profits for the royalty base ignores differences in marketing, advertising, and selling expenses for different technologies.[30]

The industry standards method, also referred to as the market or comparable technology method, attempts to value an intellectual property asset by reference to royalty rates in similar past transactions. Similar to the 25 percent rule, the industry standards method does not attempt to value an intellectual property asset per se, but rather it apportions the value of the intellectual property asset between the licensor and licensee. Also similar to the 25 percent rule, the industry standards method is based on past experience.[31]  
    1. Computing. 1%-5% for hardware; as high as 25% for software.
    2. Biotechnology. 8%-12% depending on factors such as stage of development and intellectual property strength; usually including large initial payments up to tens of millions of dollars.
    3. Automotive. Below 5% for licensed in technologies, with the majority below 2%; slightly higher rates for licensed out technology.
    4. Health Care. License in rates between 2% and 10%; license out rates between 5% and 10%.

The industry standards method of valuation is subject to a number of limitations. Some of these limitations relate to the comparability of transactions discussed above in connection with the market method of valuation. Intellectual property is inherently dissimilar, and intellectual property exchanges are motivated by unique strategic considerations. In addition, published royalty rates are often based on broad industry classifications and provided in terms of wide percentage ranges. There may be significant differences in royalty rates within an industry, and the wide percentage ranges may provide little guidance on an appropriate royalty rate for the intellectual property asset being valued.[32]

The ranking method of valuation compares the intellectual property asset to be valued to comparable intellectual property assets on a subjective or objective scale.[33] There are five components to a ranking method:
i.       scoring criteria,
ii.     scoring system,
iii.   scoring scale,
iv.   weighting factors, and
v.     the decision table.[34]
This method has found favour in many a transaction, however it has one failing with regard to specificity of a valuation. This method sets broad standards applicable across a range of intellectual property assets but fails in the consideration of a specific or unique or a single intellectual property asset. This is due to the fact that ranking too is abased on past experience.
This method creates a departure from previous methods by not relying on the value or rank allotted but on the patent itself. A firm that has good research and development history and that continuously renews patents will have a better market value. Similarly prior art citations and patent maintenance fees are also looked into. The more the number of these criteria the greater the value of the patent.[35]  This method is more academic and less useful in the practical arena as the number of citations allotted to a patent is more reflective of its academic characteristics than its practical utility.

Certain other methods like the discounted cash flow method, the Monte Carlo method, the Disaggregation method, the Options method and the Competitive Advantage Value method are also utilized but they are beyond the scope of the present topic.[36]

In this day and age of globalization, companies are increasingly looking to capture a greater market area, turn out more products at a faster rate, i.e., reduce the research-sale cycle, and also to maximize profits.[37] The corporations, in an increasingly knowledge based global economy also seek to enhance their databases of research and development in various areas.[38]
 Attrition or stagnation in such a case may very well lead to a collapse of the company. 

To this end most corporate entities are looking to grow. But the question remains as to growth in what manner – whether organic or by acquisition?  It is noted that the trend has turned towards mergers and acquisitions for growth.[39] The reasons for this are twofold – first, the cost for research and development are reduced vastly; secondly, core intellectual property assets are combined; third, intra-company transfer of intellectual property assets is easier than inter-company transfers and internalization of distribution reduces costs in general.[40]

According to Dilley the logical conclusion of this must be that such companies will be more inclined to pursue growth by acquisition than organic growth in relation to these product markets. Diversification growth by acquisition can of course continue unaffected by this consideration in unconnected product markets.[41]

In 2004, there was a significant increase in pharmaceutical M&A activity with values rising to $100 billion almost reaching the record levels of 2000. In the pharmaceutical sector there were eight deals valued at over $1 billion, compared to five in 2003. The overall improvement in market sentiment is reflected in the increase in deals to 703 from 568 in 2003.[42]

In relation to pharmaceutical companies vertical mergers are ample. Mainstream companies controlling a large part of the market often merge with the smaller companies which have specialist research and development cells.[43] The implications of this predict that in the future the market may see large companies with large market command merge with smaller companies with core research cells. The market command of one will fully utilize the intellectual property assets of the other. Horizontal mergers see the merging companies combining their research expertise. Bayer and Glaxo have emerged as market behemoths in this manner.[44]


Since there is no right way to evaluate, parties negotiating at arms length over valuation come up with estimates that can vary by any order of magnitude. At best, the many methods that may be employed to determine and justify a valuation of an asset will set a range of potential valuations within which the parties must negotiate in order to arrive at an acceptable final valuation and price structure for the asset transfer.[45]

So the task of valuation is not necessarily to fix a firm price from which no deviation is anticipated, but to:
i.         determine a minimum-to-maximum range of viable valuations in which to operate;
ii.       find an area within that reasonable range in which the parties would like to begin negotiations;
iii.     settle upon one or more compelling negotiation points that tend to support why any valuation is indeed accurate and fair; and
iv.     leverage that information via negotiation to close the deal.[46]

Therefore, the party valuing the asset must consider:
i.         the asset that is being transferred;
ii.       the method of its transfer (exclusive license, nonexclusive license, assignment, sale, or combinations thereof, etc.); and
iii.     the circumstances under which it is transferred.[47]

These three factors will not only affect the valuation, but will impact what valuation methods actually make sense.[48]

The term “blue sky” refers to the Federal as well as State security laws of the USA[49] however it has gradually become a term endemic to securities and refers in general to the safety factor involved in securities transactions.[50] Indeed, in Wall Street the jargon associated with a safe transaction is that it has been “blue skied”.[51]

While there are many intellectual property valuation techniques, it is indeed not a case where one is spoilt for choice; an improper valuation of an intellectual property asset can result in not just a fall of the value of the company selling (in case of a takeover) or transferring (in case of mergers and amalgamations) the asset, it can also result in a transaction of transfer of assets in a merger or amalgamation procedure not being “blue-skied”.[52] In such a case regulatory action occurs.

Thus, in a merger or amalgamation procedure the transferor and transferee companies are often hard pressed to choose the safest valuation method.[53]

In any acquisition, intellectual property is likely to be reflected in the value of goodwill on the acquirer’s books as well as in specifically identified items. If the value of important intellectual property becomes impaired, this impairment may have to be considered in determining whether there is an impairment of the acquirer's goodwill that requires a write-down on the company's financial statements.[54]

In this regard legislations like the Sarbanes-Oxley Act, 2002 of the United States[55] and certain international accounting standards[56] require companies to provide certified copies of their valuation sheets. In fact, the Sarbanes-Oxley Act requires this certification to be attested by the CFO and the CEO of the company.[57] The acquisition documents of a company which is going to be acquired by another, as well as the transfer of assets documents, in a merger and acquisition procedure as a norm contain the valuation details of the intellectual property assets.[58]

The internal control provisions and the certifications required under the Sarbanes Oxley Act, 2002[59] contemplate that managers (CEOs, CFOs) understand and assure the quality of the company's systems for managing and valuing its intellectual property and provide a means of regularly assessing developments in the portfolio. This includes evaluating the valuation methods for intellectual property and the company's internal intellectual property licensing, maintenance and enforcement strategy and mechanisms in place to protect and enforce the company's intellectual property rights.[60]

For companies that have a significant amount of intellectual property recorded as a valuable asset, it will be necessary for management to analyze in the MD&A(Management Discussion and Analysis) section of the Report of the Annual General Meeting the intellectual property assets and evaluate the how their assets are carried on the company's books and the risks of impairment in order to provide investors with more transparent disclosure surrounding the contributions of a company's intellectual property to the company's operations and earnings.[61]

One of the pitfalls in intellectual property asset valuation in mergers and acquisitions is that reciprocal licenses may risk treatment as sales or exchanges of intellectual property or as involving advance royalties, and license arrangements tied to services, such as R&D services, may be construed as transfers of property for services giving rise to gain recognition and compensation income.[62] Such a case may invite regulatory action which may lead to the questioning of the validity of the merger procedure; the Honeywell merger is a case in point.[63]

Another pitfall is the ownership of an intellectual property asset with regard to termination. This is where valuation is of the most assistance. When a corporate partnership terminates or in the case of a demerger, then intellectual property assets which have acquired value in the merged company but originated in the transferor company have to be reassessed and valued.[64] While the ownership and control of an intellectual property asset may rest with any entity formed from the demerger, the valuation has to decide the compensation to be paid to the pre-demerger entity. In such case the income method and the disaggregation method are most suited.[65]


The market power conferred by a patented process will provide value if other processes are not available to perform the same function. The more monopolistic power the intellectual property confers, the higher the value.[66]

If the financially troubled seller has experienced an interruption of its business, it will be more difficult to ascertain the value of the intellectual property. Potential purchasers will measure the value of the property by the income stream it produces. Accordingly, the value can dissolve if operations cease.[67]

The courts seem most comfortable with valuations undertaken by more than one method, when the results of the different approaches lend credibility to the value proffered to the court.[68] Meaningful corroboration of valuation results is an integral part of any well-thought-out appraisal. Whenever possible, results should be corroborated against one or more benchmarks.[69] Valuation acquires an entirely new facet when it seeks to distribute to all the participants in the merger or acquisition procedure a fair deal or a fair share.

 A fair market value determination typically seeks to establish that feasible range of values within which a “win-win” outcome for both the transferor and the transferee may be achieved. Such an outcome only occurs if there is a feasible range of values between the seller's floor and the buyer's ceiling.[70]

It is clear from the outset that Intellectual Property valuation is here to stay,[71] particularly in transactions where intellectual property assets comprise a significant portion of total value. While there is no clear methodology to assess or assign to an intellectual property asset a value the objective of the very exercise is crystal clear. Keeping that in mind it is essential that the appropriate valuation technique be chosen. Corroboration is indeed the best method.[72] For instance, the valuation of a trademark in the apparel business could be corroborated against published industry-wide benchmarks. This comparison could be made by way of the appraised trademark value to firm total (tangible plus intangible) value ratio.

This indeed is the gist of the paper – the settlement of all issues relating to intellectual property assessment in mergers and acquisitions – a kind of phronesis.[73]

[1] Mark A. Peterson, Technology Pricing In Joint Ventures, 1499 PLI/Corp 295

[2] ibid

[3] Dr. Prabuddha Ganguli, Protection Of Intellectual Property Rights Of Advanced Technologies For The Benefits Of Small And Medium-Sized Enterprises (SMEs), Venture Businesses And Research And Development Institutions

[4] Federal Reserve Board Chairman Alan Greenspan recently noted that corporate valuation has shifted from physical property to intellectual property, and thus issues related to the protection of intellectual property have become more significant.

[5]Ted Hagelin, A New Method To Value Intellectual Property, 30 AIPLA Q.J. 353

[6] David P. Miranda, Insurance Coverage For Intellectual Property Litigation, 77-AUG N.Y. St. B.J. 42

[7] ibid

[8] Ted Hagelin, Valuation Of Intellectual Property Assets: An Overview, 52 Syracuse L. Rev. 1133

[9]Weston Anson & Donita Suchy, Fundamentals Of Intellectual Property Valuation: A Primer For Identifying And Determining Value, 24-JUN Am. Bankr. Inst. J. 34

[10] Thomas A. Maier, How Lawyers Use Financial Information: Mergers, Acquisitions, Valuation, 1500 PLI/Corp 351

[11] Glenn A. Gunderson & Paul Kavanaugh, Intellectual Property in Mergers & Acquisitions, Trademarks in Business Transactions Forum, International Trademark Association, Sept. 16-17, 1999

[12] Section 2(j), 2(jl), 2(l), 3, The Patents Act, 1970; 35 U.S.C. §§ 101-103 (2001)

[13]17 U.S.C. § 102(a) (1995)

[14]17 U.S.C. § 1052(f) (1997)

[15] Ted Hagelin, A New Method To Value Intellectual Property, 30 AIPLA Q.J. 353

[16] Rick Nathan, Valuation of Software Inventions: What Are They Worth in Economic Terms?, SD35 ALI-ABA 145, 159 (1998)

[17] Supra at note 11

[18] Brian Daniel, Financial Aspects of Licensing Agreements: Valuation and Auditing, 644 PLI/Pat 85 (2001)

[19] Id at 822

[20] Lauren Johnston Stiroh & Richard T. Rapp, Modern Methods for the Valuation of Intellectual Property, 532 PLI/Pat 817, 821 (1998)

[21] Richard Neifeld, A Macro-Economic Model Providing Patent Valuation and Patent Based Company Financial Indicators, 83 J. PAT. & TRADEMARK OFF. SOC'Y 211 (2001)

[22] Ted Hagelin, A New Method To Value Intellectual Property, 30 AIPLA Q.J. 353

[23] ibid

[24] ibid

[25]Daniel R. Cahoy, Changing The Rules In The Middle Of The Game: How The Prospective Application Of Judicial Decisions Related To Intellectual Property Can Promote Economic Efficiency, 41 Am. Bus. L.J. 1

[26] To write off the cost of an asset over a fixed period of time.

[27] Financial Accounting Standard 142(FAS 142) and International Accounting Standard 38 (IAS 38). FAS 141 on Business Combinations and FAS 142 on Goodwill and other Intangible Assets.

[28] Richard Neifeld, A Macro-Economic Model Providing Patent Valuation and Patent Based Company Financial Indicators, 83 J. PAT. & TRADEMARK OFF. SOC'Y 211 (2001)

[29]ibid; Lee G. Meyer, Intellectual Property In Today's Financing Market, 19-MAR Am. Bankr. Inst. J. 20


[31] Supra at note 20
[32] Supra at note 21

[33] Supra at note 22

[34] ibid; Lee G. Meyer, Intellectual Property In Today's Financing Market, 19-MAR Am. Bankr. Inst. J. 20

[35] The TR Patent Scorecard 2001, TECHNOLOGY REVIEW, May 2001, at 48, available at

[36] Press Release, The Patent & License Exchange, Inc., TRRU® Professional Metrics Version 1.0 Helps Finance, Legal and R&D Experts Calculate Intellectual Property Values (Aug. 20, 2001), at

[37] James Dilley, The Effect Of EC Competition Law On Intellectual Property Valuations: Implications For Corporate Strategies, 4 Or. Rev. Int'l L. 104

[38] ibid

[39] Samuelson, Challenges for the World Intellectual Property Organization and the Trade-related Aspects of Intellectual Property Rights Council in Regulating Intellectual Property in the Information Age, 11 Eur. Intell. Prop. Rev., 579, 586-588 (1999)

[40] Rose, The EU Trade Barrier Regulation: An Effective Instrument for Promoting Global Harmonisation of Intellectual Property Rights? 6 Eur. Intell. Prop. Rev., 313, 317 (1999)

[41] James Dilley, The Effect Of EC Competition Law On Intellectual Property Valuations: Implications For Corporate Strategies, 4 Or. Rev. Int'l L. 104


[43] Case No. IV/M. 1878, Pfizer/Warner-Lambert, para. 30,
[44] ibid

[45]Keith Witek, Part IV. Intellectual Property Issues, 2 Internet Law and Practice § 22:3

[46] ibid

[47] Chapter III of the Report Of Expert Group On Guidelines On Valuation Of Corporate Assets And Shares also provides for the same contingency.

[48] ibid


[50] Hall v. Geiger-Jones Co., 242 U.S. 539 (1917)

[51] For example, if a stock broker in the state of New York has complied with licensing or registration requirements for Florida, Texas and Illinois, then he or she is said the be "blue skied" in those states and may solicit sales from account holders residing therein. Blue sky often is referred to in private placements, IPOs and secondary underwritings to designate the states in which securities may be sold. The term also is frequently used with many securities quoted on the OTC Bulletin Board. <last visited on 25 September, 2005>

[52] Paul J. Heald & F. Russell Denton,  Random Walks, Non-Cooperative Games, And The Complex Mathematics Of Patent Pricing, 55 Rutgers L. Rev. 1175

[53] ibid
[54] Karen Kincaid Balmer, The Impact Of FAS 141, FAS 142 And Sarbanes-Oxley On Financial Reporting For Intellectual Property, 1439 PLI/Corp 711

[55] Section 302 and 304

[56] FAS 141 and 142

[57] Supra at note 52

[58] Lanning G. Bryer & Scott J. Lebson, Intellectual Property Assets in Mergers and Acquisitions, (John Wiley & Sons Publications, 2002)

[59] Section 302 and Section 404

[60] Supra at note 52
[61] Supra at note 52

[62] James M. Boyle & Sheri L. Everson, Alliances Not In Partnership Or Corporate Form, 604 PLI/Tax 749

[63] James Dilley, The Effect Of EC Competition Law On Intellectual Property Valuations: Implications For Corporate Strategies, 4 Or. Rev. Int'l L. 104

[64] Salvatore J. Vitiello, Financing Strategies For Biotechnology Companies, 718 PLI/Pat 643

[65]Andrew J. Sherman, The Business Lawyer's Expanding Role In Facilitating Small And Mid-Sized
Merger And Acquisition Transactions, 1 Bus. L. Brief (Am. U.) 9
[66] Richard G. Mason & Beth M. Polebaum, Buying Intellectual Property From Troubled Companies, 779 PLI/Pat 365

[67] In re Comband Technologies, Inc. No. 94-2181, 1995 U.S. App. LEXIS 31064 (4th Cir. Nov. 2, 1995)

[68]In re Greate Bay Hotel & Casino, Inc., 251 B.R. 213 (Bankr. D.N.J. 2000). An expert testifying had to provide the court with an understanding of two competing plans, presented a discounted cash flow, comparable company, and comparable transaction analyses. He then tested these valuations against the price at which each plan proponent was trying to purchase the business, which was called an implied purchase price analysis. The court supported the plan when the results of all the valuations were consistent.

[69]David Tenenbaum, Valuing Intellectual Property Assets, 709 PLI/Pat 225

[70] ibid

[71] In joint ventures, for example, partners often contribute assets that have readily determinable value such as cash and financial instruments, and property, plant, & equipment. Where one or more intangible assets comprise a significant portion of a partner's contribution, IP valuation may become the mechanism by which the partner is able to establish its total fair contribution to the capital accounts. Scott D. Phillips & David Tenenbaum, Emerging Issues In Management And Valuation Of Intellectual Property Assets, 614A PLI/Pat 233

[72] Carol R. Goforth & Ronald R. Goforth, Technology Due Diligence--The Need For And Benefits Of Technology Assessment In Connection With Investment In High-Tech Companies, 27 Rutgers Computer & Tech. L.J. 165

[73] Phronesis is a Greek term used to describe practical wisdom leading to a correct judgement. 

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