In virtually every bankruptcy situation today, the question of identifying, valuing, and disposing of intellectual property has become an important issue. We provide an overview of how to identify intellectual property and intangible assets and how to group those components into bundles of discrete value.

It is useful to review some of the most important questions one faces when sorting through the issues surrounding technology, IT, patents, trademarks, brands, and other intangibles, collectively grouped together as IP. Some of those key questions are the following:

- What kinds of IP does a company have?
- How can the IP be best identified?
- Does the intellectual property maintain its value when it is in bankruptcy?
- Who owns and controls that value?
- Do existing licenses have value?
- Who controls the destiny of those licenses?
- How do you value these assets in a liquidation scenario?
- What sort of liquidation discount is experienced when a patent, a trademark, a copyright, or a software license is sold?
- Is there a formula to establish the descending value of these assets in liquidation?
- How do you market and dispose of these assets most cost effectively and time effectively?

While each bankruptcy is different, there is a basic four-step process when valuing and disposing of intellectual property and intangible assets. Sometimes our task is to simply value the assets, while other clients have asked us to assist in the disposition or sale of their intellectual property. Some of the latter include Boston Market, Kenar, Montgomery Ward, Heilig-Meyers, and Polaroid. In nearly every case, the process breaks down into four primary levels of activity:

1. First is the audit and identification process, during which all intellectual property, IT, and other salable intangibles are identified.
2. The second step is to place market values on the assets.
3. The third step in the process is to develop a plan to monetize those assets.
4. The securitization, sale, or disposal phase completes the process.

A company's intellectual assets should be viewed as a portfolio of IP and intangibles, and similar types of IP should be bundled into logical groups for valuation and sale or monetization purposes. When analyzing a company's intellectual assets and identifying those with value, a simple five-part process typically suffices:

• Identify all the elements of IP that may hold value.


• Look within all operations of the corporation, including marketing, IT, branding, legal, and R&D, as well as operating subsidiaries and companies.


• Think of these individual assets as elements of a larger whole -- components of value within a logical bundle or grouping.


• Identify all intangibles, even small assets that might not necessarily be large enough or important enough to isolate and sell on their own.


• Once all of the elements or components of value are identified, the components can then be bundled into logical groupings for analysis, valuation and possible monetization.

Intellectually, the process is simple. However, the actual identification, collation, triage, and valuation of these components of value can be time consuming and complex.

A word of caution: Speed is of the essence, and these assets must be quickly and efficiently identified and packaged. It is important that key pieces of intellectual property not be skimmed off by secured lenders or others. The process cries out for the use of professionals experienced at the assembly, valuation, and disposal of intellectual property who can speed the process and ensure that all assets are identified and their value is maximized.

References

About CONSOR

As the only market-based consulting firm specializing in intellectual property, CONSOR provides services in the following four areas: valuation, litigation support, licensing, and disposition. CONSOR has built a solid foundation of clients and gained invaluable work experience over the past 25 years. We take a marketplace business approach in order to help our clients reach their goals, using real-world evidence and marketing criteria. We are dedicated to assisting our clients in maximizing the value of their intellectual property and intangible asset portfolios, while helping to minimize risk and uncertainty.

Valuation and Research

The proprietary data controlled by CONSOR related to intellectual property valuation is unmatched. For over two decades the firm has been accumulating and organizing information and data related to trademarks, patents and copyrights and the royalty rates, values and transaction prices of those assets. Both current and historical data are available not only from our private resources, but also from public databases. Whether establishing royalty rates for trademarks, patents, domain names, copyrights, artwork or other intellectual property, or whether establishing value for these same assets, CONSOR provides the research and data necessary.

Litigation Support and Expert Witness Services

CONSOR provides clients and their legal counsel with IP litigation support and expert witness services based on exceptional experience in assessing damages in intellectual property litigation for a wide range of industries and IP issues. Our principals are Daubert qualified experts whose areas of expertise include valuation and the quantification of damages, fair market royalty rates, infringement and confusion, licensing customs and practices, and bankruptcy.

Licensing and Leveraging

Our core specialty is the licensing and leveraging of trademarks and brands patents and other IP. We use leveraging as the ability to maximize the value of IP and intangible assets, using our proprietary licensing techniques and skills. We provide expertise on the licensing of all types of intellectual assets ranging from celebrities to portfolios of copyrighted material, and from patents and technologies to trademarks and corporate brands. Beyond licensing, leveraging may also take the form of selling, joint ventures, co-branding, or even mergers.

Disposition

CONSOR understands that the importance of being able to identify, value and manage intangible assets effectively. The firm has actively managed, or co-managed with legal counsel, a variety of transaction formats, including auctions, outright sales of assets or IP portfolios, valuation and management of asset contributions to joint ventures, collateralization of intellectual property for secondary or mezzanine funding, and the valuation and assembly of assets for securitization. Through experience and the application of traditional and proprietary valuation methodologies, the experts at CONSOR can extract the maximum value from any transaction.