Intellectual Property and Assessing its Financial Value

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Intellectual Property and Assessing Its Financial Value

For multiple parties a more complex formula can be used:

LikLi

Isk

Is

OPhi

Ibi

Ib Is

OPh

Isk

Is

==π−

+

π

where:

Lik = royalty from licensee I to licensor k

Li = license royalty payments

πOPhi = operating profit from licensee i

Isk = investments by licensor k

Is = total licensors’ investments

Ib = total licensees’ investments

Ibi = investment by licensee i

πOPh = total operating profit from licensees.

Let us look at an example where a food-related new product is

developed. Assume the licensor took the initiative to start a project,

established a proof of concept, and contacted a major food producer

such as Unilever ...