Why IP Valuation Matters
Speaking to Dr Ghafele, we learn the importance behind valuing your IP, how it can change an IP infringement case, an M&A transaction and the future scope of a business.
Dr Ghafele, can you please tell us what an IP valuation is and how it can change the scope of a business?
An IP valuation helps to better understand the business dynamics around IP. An IP Valuation is core to any legal, business or financial decision. Patents, copyrights, trademarks, trade secrets and, more broadly, software and data rights offer a firm the opportunity to generate income. An IP Valuation allows us to make such a relationship visible.
Can you tell me a bit more about the use of an IP valuation in legal disputes?
OxFirst’s IP valuations help determine damages or licensing rates. Litigation, arbitration and mediation are a very central use case for an IP valuation. OxFirst’s IP valuations have been used several times in legal disputes and have helped the parties involved in the case come to grips with the economic worth of the IP. I offered training to the German Judiciary in IP Valuation and have provided support to judges to understand this important part of a case. Many cases do not centre around infringement, but around the economic impact of the infringement. Such questions are core to the work OxFirst does.
Can you share the method and steps you take to finalise an IP valuation?
An OxFirst IP valuation consists of an initial due diligence, which is then followed by a strategic assessment of the various opportunities provided by the IP to maximise profits. OxFirst makes use of various recognised valuation approaches that give insights on the economic worth of the IP. In legal disputes, one can look at issues such as unjustified enrichment or lost profits, for example. One may also discuss how the IP relates to business success and failures or how it affects cash flow.
How can the results you end up with change and impact a legal case you are instructed on?
In a legal dispute, it can help determine a damage award or an adequate licensing rate. It can also assist with IP sales or licensing negotiation.
An IP valuation is, however, also central to a firm’s business strategy. It can allow a company to understand what IP to hold on tightly to and what to license out or in. It is only through an adequate economic analysis that the many business options associated with IP become visible.
Just to give you an example, we recently completed an IP valuation for a high tech venture. With the help of the OxFirst IP valuation, the firm was in a position to launch a new licensing programme. The OxFirst IP valuation was essential for the launch of this new venture.
At another instance, the OxFirst IP valuation helped assess the economic risks associated with IP in an M&A transaction. The economic analysis of the IP helped understand any potential anti-competitive market situation the merger could trigger and also helped the parties come to grips with the acquisition price.
Finally, what impact can an IP valuation have on the economy and businesses?
OxFirst’s IP valuations have a proven track record of success. OxFirst has acted in Supreme Court Cases to help determine the economic impact of IP. The IP valuation was instrumental to finding a royalty rate and determine the economic effects of legal remedies. Because OxFirst is an economic consultancy, it can offer critical insights on IP, which are not available when looking at IP through a legal lens.
OxFirst’s IP valuations have helped companies of various sizes and stages in their lives maximise revenues while being in a position to control costs. At the same time, they have allowed IPR managers to make educated strategy choices.
All of these advantages are immensely valuable in the age of COVID-19, where we need to ensure every Pound is spent wisely.
Dr Roya Ghafele
Managing Director of OxFirst Ltd
OxFirst. Oxford Science Park
John Eccles House, Robert Robinson Avenue
Oxford, OX44GP, UK
Dr Ghafele has been the Director of OxFirst, an award-winning law and economics consultancy, since 2011. In addition, she has held a Lectureship (Assistant Professor) in International Political Economy with Oxford University and was also a tenured Lecturer (Assistant Professor) in Law with Edinburgh University. Prior to that, she had post-doctoral assignments at Harvard and U.C. Berkeley. From 2002-2007 she worked as an Economist with the World Intellectual Property Organization (WIPO) and the OECD. She started her career with McKinsey in corporate finance. Her PhD was awarded the Theodor Koerner Research Prize by the President of the Republic of Austria. Dr Ghafele was trained at Johns Hopkins University, School of Advanced International Studies, the Sorbonne and Vienna University. During the course of her studies, she was fully funded by the Austrian Government because her academic merits were continuously of outstanding quality. She is native in German and fluent in English, French and Italian.
Specialities: IP valuation, Damage Calculations, Competition Law & Economics, FRAND, Royalty Rate Determination, Economic Assessment of Legal Contexts