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Paul Cliff
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Copyright Valuation

Copyright is an important practical component of intellectual property / IP rights, brands and intangible assets. In general, copyright protects work such as:

  • Literary, dramatic, musical and artistic work, including illustration and photography.
  • Non-literary written work, such as software, web content and databases.
  • Sound and music recordings.
  • Film and television recordings.
  • Broadcasts.
  • The layout of published editions of written, dramatic and musical works.

Copyright gives the right to prevent copying, distributing copies, renting or lending copies, performing, showing or playing in public, making an adaptation, and putting it on the internet. In most countries copyright lasts a minimum of life plus 50 years for most types of written, dramatic and artistic works, and at least 25 years for photographs. It can be different for other types of work.

Valuing copyright requires an in-depth understanding of the particular business and industry in which the copyright operates. Copyright valuation is something Intangible Business has carried out for a number of different copyright properties including books, films, plays, TV, music, characters, images and musicals.

Widely adopted copyright valuation approaches

When carrying out a copyright valuation Intangible Business adopts widely accepted approaches based on a combination of the income, market and cost approaches.

  • The income approach uses estimates of future estimated economic benefits or cash flows and discounts them, for the associated time and risks involved, to a present value. Each type of copyright has key sensitivities to consider such as the duration of the copyright and the expected lifetime of its creator. Another key consideration during copyright valuation is what drives the value of the copyright. For instance, a living musician might supports his back catalogue of recordings through personal appearances and new releases, buoying the copyright valuation. After the musician stops recording, the copyright value may diminish more rapidly than expected as the support is no longer there.
  • The market approach uses market based indicators of value. For copyright this can be transactions involving selling, buying, franchising or licensing copyright and related IP rights, which are often in practice bundled together.
  • There are two general considerations to the cost approach: the historic cost of creating a copyright and the estimated cost and time that would be required to create equivalent or replacement copyright.

Copyright royalties and the relief from royalty method

For copyright an important analysis for a valuation is the assessment of reasonable royalties that would be payable under a licence / license agreement. Intangible Business assesses this in the context of the licensing strategy being employed and analysing complex elements including the inclusion of other commercial rights and obligations. The relief from royalty method has the advantage that it is based on the income approach, the fundemantal premise of commercial value, and also uses components which can be benchmarked or compared, under the market approach, with licence / license  agreements. It is therefore a rounded and commercial method. 

Focus of Intangible Business

Copyright valuation is a complex process requiring an understanding of marketing, financial and the practical application of legal rights. Intangible Business is experienced and qualified in all of these aspects of copyright valuation and has carried out copyright valuations for a number of different purposes including tax planning, inheritance tax (IHT), dispute resolution, licensing, counterfeiting, mergers, acquisitions and joint ventures. The application of these approaches benefits from Intangible Business’ specific focus on forecasts, with research and analysis of market transactions for different but comparable assets where relevant information is difficult to obtain. Intangible Business adopts a thorough approach based on a good knowledge and experience of how to find, analyse and present information in a way which better informs a copyright valuation.

Intangible Business also ensures that the approaches used, and conclusions reached, are commercially balanced, realistic and consistent with analyses required for all the different reasons copyright valuations are required and carried out in practice.

Support to legal services

If copyright value is at stake, it will be a significant issue. Intangible Business is experienced in providing expert independent copyright valuation services for IP management, owners and their legal or other advisers in particular for: dispute resolution; corporate deals; IP management; and supporting other legal services.

Example Cases