The Valuation of Intellectual Property for Various Purposes

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More than 30 approaches to the valuation or measurement of intangibles have emerged in the past 10 years (Andriessen, 2004). This suggests that interest in the area has been increasing, that no gold standard has yet to emerge, and simultaneously the net effect is added noise in an area where there already is confusing language (Contractor, 2001, p.3).


Some approaches to valuation have evolved from others for evaluation, potentially confounding finance tools with those for measuring internal performance indicators; for example, where human resources may be regarded as the "knowledge assets" of a company (Andriessen, 2004, p.233). Other methods appear to have emerged primarily for external reporting of financial information. From the critical perspective, an evident reason for this accelerated activity is the growing importance of intangibles in the modern economy. Near the end of the 20th century, 79% of jobs and 76% of the American GNP were from weightless enterprise (Contractor, 2001, pp. XI-XII). There also is a greater call for valuations in modern business practice, including the purchase and sale of brands, international transfer pricing, mergers, and the formation of alliances.
The proliferation of many methods and labels, all chasing many metrics, seems to be working against a common understanding of the fundamentals in the valuation of intellectual property. Even the word value has several meanings in English. ...
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