Intellectual Property: Valuation, Exploitation, and Infringement Damages, 2016 Cumulative Supplement

Up-to-date, expert guidance and a valuable tool kit for IP valuation Intellectual Property, Valuation, Exploitation, and Infringement Damages provides practical tools and expert clarification for the valuation of intangible assets. This new 2016 Cumulative Supplement contains the latest laws, regulations, and practices surrounding licensing and joint ventures, with practical analytical models that simplify the calculation of royalties and equity splits. As a companion to the comprehensive Intellectual Property, this book provides invaluable guidance toward the investment aspects, business strategies, taxes, and accounting practices involved in intellectual property protection and profit, to help licensing professionals structure optimal arrangements and mitigate risks. Written by leading experts in the intellectual property realm, this guide is a must-have resource for anyone working with intangible assets. Intellectual property is more than a simple profit center; to many owners, it's the cornerstone of their organization, and must be rigorously protected and exploited to the fullest extent. This book provides clear guidance on valuation, which is the foundation of a successful IP strategy. Define the value of intangible assets in real-money terms Examine the business economics of licensing and joint venture strategies Understand the relevant legal, tax, and accounting practices Determine fair royalty rates and equity splits Patents, trademarks, formulas, copyrights, brand names, distribution systems—all fall under the intellectual property umbrella, and each might be the competitive edge upon which a business is built. Intellectual property can cost hundreds of millions of dollars to create, and is often irreplaceable with no substitute or alternative available, making it an organization's most important asset. Protect it properly, and reap every ounce of profit it can produce with the important guidance in Intellectual Property, Valuation, Exploitation, and Infringement Damages, 2016 Cumulative Supplement.

Table of Contents:
Preface xix 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 27B License Fees and Royalty Rate Frequency for Technology (New) 115 27B.1 Real Deal Royalty Rates 116 27B.2 Per Unit Royalties 118 27B.3 License Fees 119 27B.4 Conclusion 120 Chapter 27C Royalty Rates and License Fees for Pharmaceuticals And Biotechnology (New) 121 27C.1 The Parties—Licensing between Corporations Dominates 122 27C.2 Royalty Rates 122 27C.3 License Fees 124 27C.4 Key Technologies 125 27C.5 Developmental Stages of Technology 126 27C.6 Conclusion 128 Chapter 27D Licensee Fees and Royalty Rates for Technology Update (New) 129 27D.1 Per Unit Royalties 131 27D.2 License Fees 132 Chapter 33A The Magnitude and Meaning of Royalty Misreporting (New) 134 33A.1 Introduction 134 33A.2 “Why?” versus “How?” 135 33A.3 Math Errors: 5% Error Rate 138 33A.4 Royalty Rate Errors: 4% Error Rate 139 33A.5 Transfer Prices: 4% Error Rate 141 33A.6 Unreported Benchmarks and Milestones: 5% Error Rate 142 33A.7 Unreported Sales: 16% Error Rate 143 33A.8 Disallowed Deductions: 9% Error Rate 143 33A.9 Unreported Sublicenses: 17% Error Rate 144 33A.10 Questionable License Interpretation: 40% Error Rate 144 33A.11 Conclusion 145 Chapter 33B Intellectual Property Audit and Management (New) 146 33B.1 Introduction 147 33B.2 Intellectual Property Is Important 147 33B.3 But Intellectual Property Is Frequently Mismanaged 148 33B.4 Why the Intellectual Property Dichotomy? 148 33B.5 The First Step: An Intellectual Property Audit 149 33B.6 From IP Audit to IP Management 151 33B.7 Insufficient Approaches 152 33B.8 A New Intellectual Property Management Paradigm 153 33B.9 Available Tools 153 33B.10 Benefits of Intellectual Property Management 154 33B.11 When to Do an Intellectual Property Audit 155 33B.12 How to Do an Intellectual Property Audit 157 33B.13 Software Solutions to Make the Job Easier 160 33B.14 Conclusion 163 Chapter 35A Quantifying Reasonable Royalties: The Entire Market Value Rule (New) 167 Chapter 35B New Guidance about Apportionment (New) 178 35B.1 Apportionment of the Royalty Base 178 35B.2 The Infringed Invention 179 35B.3 Determination of Damages 181 35B.4 Georgia-Pacific and the Hypothetical Negotiation 184 Chapter 35C Lost Profits for New Businesses (New) 188 35C.1 Why Are Profits Missing 189 35C.2 Guidance from Business Plans 190 35C.3 Management Team 190 35C.4 Operating Capital 191 35C.5 Comparables 191 35C.6 Defendant’s Profits 192 35C.7 Before-and-After Analysis Will Not Work 192 35C.8 Lost Business Value 192 35C.9 Conclusion 193 Chapter 45 New Measure of Infringement Damages—Future Damages (New) 194 45.1 Royalty Rate for Future Damages 196 45.2 What about Future Lost Profits? 207 Chapter 45A Continually Evolving Patent Damages (New) 208 45A.1 Post-Verdict Royalty Rates 209 45A.2 Optimize Your Patented Technology or Lose It 214 45A.3 Litigation-Based Licenses 217 Chapter 45B The 25% Rule Is Dead (New) 222 Appendix G More Sample Royalty Rate Information (New) 225 Appendix H Trademark Royalty Rates (New) 253 Appendix H-A More Trademark and Copyright Royalty Rates (New) 271 Appendix I Pharmaceutical and Biotechnology Royalty Rates (New) 309 Appendix J Telecommunications Royalty Rates (New) 333 Appendix K Electrical and Energy Royalty Rates (New) 369 Index 403

About the Author :
Russell L. Parr, CFA, ASA is President of Intellectual Property Research Associates (www.ipresearch.com). He is an expert in determining the value of intellectual property. Mr. Parr's books about intellectual property value and management are published in Japanese, Korean, Italian and English. He is dedicated to the development of comprehensive methods for accurately defining the value of intellectual property. 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.