TRADE MARK VALUATION

A Trade Mark like any other IPR tool is an intangible asset that adds value to its products or services. It can be sold, licensed or leased. Hence, valuation of the registered mark is important for:

  • Brand Management
  • Licensing
  • Acquisition
  • Brand extension
  • Sale
  • Joint Venture
  • Investment by investor
  • Financing
  • Auditing etc.

There are some common methods or approaches used to determine the value of the registered Trade Mark; they are-

  1. INCOME BASED VALUATION-under this approach the valuation of Trade Mark is calculated by deducting the future economic income that the registered mark is expected to generate from the present value of the registered Trade mark. However, Economic income can be calculated by considering the following:
  • Gross revenue
  • Net revenue
  • Gross profit
  • Net operation profit
  • Income before tax
  • Income after tax
  • Net cash flow
  • Cost saving
  1. MARKET METHOD- under this method a comparative study is done with actual price paid by the purchaser for similar product of 2 or more different registered mark or brands. In this method a detail study of market data related to sale or licensing is carried out.

Factors to be considered while calculating:

  • Timing or duration
  • Risk or uncertainty
  • Company structure
  • Market size and character
  • Cross- licensing
  • Geographical coverage or territorial jurisdiction
  • Management matter etc.

3. COST METHOD- under this approach various cost are taken into consideration in developing or creating a Trade Mark internally or externally and the duration taken in replacing the existing trade mark, having equal strength that of the former.

FACTORS TO BE CONSIDERED

  • Labour cost
  • Material cost
  • Research and development
  • Trial and testing
  • IP registration and other related costs.

4. RELIEF FROM ROYALTY METHOD:under this method the Trade Mark value is calculated based on the expected royalty earned from the same Trade Mark or similar Trade Mark or additional value on the wage of that particular Trade Mark.