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
Table of Contents
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
