Uncovering the value of intellectual property is one of the more complex tasks a company rescue or turnaround practitioner will face when a business enters insolvency, and it may be one they need specialist assistance to complete.
As a company owner or director, it’s important you have a good idea how much value is tied up in the intellectual property of the business, as this can make a difference to the options available to you on insolvency, and the route the turnaround practitioner will take.
Uncovering the value of a company’s intellectual property rights (IPR) during an administration, when seeking to liquidate a company, or during insolvency can be a complicated process. Precise evaluations can be hard to come by and should be left to the experts, but as a guide, here are some tips to help you get an idea of your IPRs worth.
Patents in the UK offer protection for 20 years and allow you to take legal action against anyone who makes, uses, sells or imports your invention without your permission. As a general rule for valuing a patent, the longer the patent has to run, the more it will be worth.
Determining the exact value of a patent depends on its nature and the possible applications of the invention. A company rescue or turnaround practitioner will typically seek the advice of a professional valuation expert to determine its price. However, factors to consider include the number of similar patents that exist, how broad the protection provided by the patent is, and the size of the industry the patent applies to.
Trademarks can be split into two camps, registered trademarks, represented by a ®, or unregistered trademarks, which are sometimes indicated by a ™. A registered trademark will usually carry more weight than an unregistered trademark, so the registration is usually an indication of value. Unlike patents, which can retain their value despite a company collapse or liquidation, the value of a trademark is usually dependent on the strength of the company behind it.
For this reason, in an insolvency situation, turnaround practitioners should look to protect brand names early on. If trading out of administration does not seem possible, it might be advisable to sell the trademark to an interested party before the company is liquidated and the trademark loses its value.
Similarly to trademarks, a design can be registered or unregistered, with registered designs protected for up to 25 years. The value of design will remain even if the business goes bust in the same way as a patent. For example, if an architect’s business were to fail, there may still be some value in the architectural plans the firm has developed, and these may interest rival firms.
Copyright cannot be registered in the same way as designs, trademarks and patents. Instead, Copyright applies to original work produced by the company that satisfies the necessary criteria. The copyright rules can be inconsistent and confusing, particularly where the application of new technologies are concerned, but copyrighted works do tend to command a high a price.
Tracing ownership of copyright can be a problem in itself, not to mention the many other aspects that need to be considered before a value can be placed on copyright. However, taking the time to establish and cement your ownership of a copyright in an insolvency or company rescue procedure can create significant rewards.
Other potential areas of value
There can also be untapped value in other intangible company assets, such as databases, domain names and even industry know-how. The good news is that more value can be attributed to this type of asset than ever before, so, if you act quickly, this could provide you with a route out of trouble.
For more information on valuing your intellectual property if you are considering liquidating, contact Company Debt today. We provide free, confidential advice on company debt and business recovery solutions to help resolve your situation quickly and painlessly call 08000 746 757.