I. What is Trademark Valuation?
The significance of Intellectual Property Rights (IPRs) in today’s business environment is undeniable, whether for startups, small enterprises, or large, established corporations. Early investment in and management of IPRs can significantly accelerate a company’s growth. Trademarks, in particular, serve not only as indicators of origin and quality but also as powerful tools for advertising products and services, helping to build customer goodwill. They are valuable intangible assets for any business. Like other assets, trademarks can be assigned, pledged, or licensed, and determining their value is crucial. Trademark valuation is essential for several reasons, including:
- Establishing a price during assignments and licensing negotiations
- Understanding the trademark’s worth and finding ways to enhance its value
- Paying the required taxes.
II. How is a Trademark valued? What are the key factors in Trademark Valuation?
A trademark is valued by using any of the following methods:
Income method:
A trademark is valued based on the income it generates for a business. Additionally, key factors such as estimated sales volume, sales amount and earnings after deducting depreciation, and other costs and tax should be considered to arrive at an accurate income generated.
Market method:
A trademark’s value is estimated based on the value and goodwill of trademarks of similar goods and services, which were recently assigned, licensed or dealt with commercially.
Cost method:
A trademark is valued based on the initial and up-to-date costs borne by a company in developing, protecting, and managing such trademark. Key factors such as Trademark search costs, advertising costs, consulting fees, registration costs, and such other initial investments by the company shall be considered while arriving at a value.
Future Income method:
A trademark is valued based on an approximation of future income which it would have brought for a company, if held by it without dealing with the trademark commercially on such present date. A greater deal of importance is laid on valuing the goodwill of such a trademark.
III. Why Trademark Valuation matters for your company?
As per the recent reports of WIPO, total investments in intangible assets are higher than the total investments in tangible assets, from a period of 1995 to 2023. This should give an idea as to how valuable intangible assets are. Valuing your trademarks will give you an edge over other competitors is monitoring your business, and negotiating better with business deals.
- If your trademark is infringed, a valuation of the same will help you to claim rightful damages from the infringer. Knowing the value of your trademark will help you to navigate through the litigation process.
- Paying tax on tangible and intangible assets is vital for any business. Non-payment of the same attracts penalty, which is an hinderance to your business. Valuing your trademark will give you a better idea as to how much tax should be paid, and by what means refund can be claimed.
- Reputation involves some kind of knowledge which is known by significant part of the public. In the current times, the traditional brick and mortar model of business in no more the rule, and companies have been expanding their mode of business globally. This has led to companies earning Transborder Reputation or Spillover Reputation. Therefore, taxes should be paid in as per the laws of the land where the business is made. A valuation of your trademark, and other house marks used in different jurisdictions will give you an edge to earn greater economic benefits.
- As abovementioned, your trademark would have a earned a transborder reputation, and you might wish to commercially exploit it multiple jurisdictions. Valuing your trademark will allow you to exploit your intangible asset on the basis of varying demand for your products and services in different markets, globally.
IV. Why avail our services?
For an accurate estimation of your trademarks, several factors as mentioned above needs to be considered and quantified. Apart from those, a checklist as below (as per WIPO) should be looked into as well-
- Your trademark should be identifiable
- There should be evidence as to existence and use of your trademark
- Your trademark should be legal, i.e., may be registered or unregistered, but should not be infringing any other person’s trademark and against the laws of the land
- Your trademark should be capable of being exploited commercially
- Your trademark should be created and subject to termination at an identifiable point of time
Contact us
Contact us to learn more about how LexGeneris can assist you with all your intellectual property needs. You can also schedule a no-cost consultation with our team of expert IP Attorneys Australia, IP Attorneys India, and IP Attorneys New Zealand.
Together, we can safeguard and enhance the value of your innovations. Our dedicated team of Patent Attorney Australia, and Trademark Attorney Australia specialists can provide expert guidance and support, helping you navigate the complexities of intellectual property law in Australia, New Zealand, India, and beyond.
