This document provides an overview of brand and intellectual property valuation. It discusses key concepts such as defining the purpose and assets being valued, forecasting future benefits, applying valuation approaches, and quantifying the economic benefits of intellectual property through tools like apportionment analysis and determining reasonable royalty rates. The goal is to translate the unique aspects of intellectual property into financial terms to understand their contribution to business value.

1. Brand Valuation
Doug Bania & Brian Buss
Nevium Intellectual Property Solutions
www.nevium.com
University of New Hampshire
School of Law
April 2016

2. When someone says value . . .
A Few Valuation Basics:
• Value = present value of future benefits
• Valuation happens every day, only some involve a formal analysis
• IP Valuation requires one more step compared to business valuation
When Asked about Valuation, we then Ask . . .
• Why: Compliance, Reporting, Transaction, Litigation, or Considering a License?
• What: Which assets, or group of assets?
• How: What data is available and which calculations will be needed?
Art & Science, but Not Magic
The objective of a valuation is to express an unambiguous opinion as to the value, expressed as a
monetary amount, of a business enterprise, asset or resource, or ownership interest therein.
– Based on ASA BVS-I

3. What is “Brand Valuation”
For these lists, “Brand” includes more than IP
Top 5 “Most Valuable Brands” from three different publications
2015 Brand Valuation Tables
(USD Millions, % of TEV at 12/31/15)
Rank Brand Finance Millward Brown Interbrand
1 Apple $128,303 21% Apple $246,992 41% Apple $170,276 28%
2 Samsung 81,716 72% Google 173,652 37% Google 120,314 26%
3 Google 76,683 16% Microsoft 115,500 30% Coca Cola 78,423 37%
4 Microsoft 67,060 18% IBM 93,987 57% Microsoft 67,670 18%
5 Verizon 59,843 20% Visa 86,009 47% IBM 65,095 40%
Method Relief from Royalty
Excess Profits paired with an
apportionment exercise
Apportionment of TEV based
on brand strength analysis
The rankings change year to year and the Valuations vary by large amounts
Brand appears to include a bundle of IP and Intangibles

4. Brand or IP?
4
We focus on valuing specific, identified assets;
which can be the “Brand Bundle” or a specific IP Assets
• Several published rankings, often cited
in financial press
• Brand is loosely defined, but almost
always more than the Company’s
trademarks
• Sometimes “Brand” value is the
difference between market value and
book value, or the value of all
intangibles and goodwill
• Brand Bundle: TM, Domain Names,
and name or logo-based rights
• Identification & quantification of
the economic benefits provided to
the owner of an IP asset
• Additional profits and/or costs
avoided due to ownership or use of
the IP asset
• Requires identification of specific
assets and apportionment of a
company’s total profits to each
identified asset
Brand Valuation IP Valuation

5. Early on,
All parties agree
on what is being
valued
Which assets will be valued?
Trademarks
Copyrights
Publicity Rights
Patents
Copyrights
Trade Secrets
Marketing Assets Technology Assets
Domain Names
Customer Lists
Relationships
Practices / Procedures
Know-how / Research
Test Results
Relationships
Practices / Procedures
What other assets are related to the IP?
What Assets are Included in the Valuation?

6. How IP Contributes to Value
6
Economic Benefits
Monopoly
Barrier to entry, exclude
others from using
• Pricing power
• Greater profit margins
Litigation
Seek damages if others
use
• Litigation award (PV of award less costs)
• Threat of litigation (force “Monopoly” or
“Permission”)
Permission
Ability to be compensated
when others use
• Value of license (PV of royalties+fees – costs)
• Value if sold
Promotion
Signals innovation,
uniqueness, source of
origin to consumers
• Additional sales
• Reduced marketing
• Incremental margin
Value is Derived From the Economic Benefits Created

7. 1. Define the Purpose and Context
2. Identify, Define & Group
3. Consider 3 Analysis Types:
Financial, Behavioral and Legal
4. Isolate and quantify the benefits
specific to the IP Assets
5. Reconcile the different analytical
approaches employed
Using Valuation Tools, you can value IP Assets; and Evaluate an opportunity to use IP Assets
Valuation of IP Assets
• Purpose is strategic or intrinsic value,
need to quantify potential synergies
• Counter-parties are known or
identified, and the Analyst can
estimate the impact on potential
counter-parties
• Goal is to quantify and evaluate the
financial and economic net benefits
of a transaction
Value of an IP Opportunity
or
Different Purpose . . . but Same Tools
The Value of IP

8. Effective use translates to
financial benefits through
greater revenues, and higher
profits
(From A to B)
Goal of creating and using IP:
A unique product that results in greater
demand and/or higher price points
The challenge: how to Quantify these benefits . . .
The Goal of IP Assets

9. Valuation Approaches
Same Approaches as Business Valuation . . .
apply as many methodologies as possible
Standard Methodologies IP Methodologies
Cost
Approach
Cost to replace or replicate • Relief from royalty
• Relief from pay per click
• R&D, Marketing, Investment
• Impressions
Income
Approach
Present Value (PV)
of future benefits
• Discounted cash flows (DCF)
• Relief from Royalty
• Lost Profits / Unjust Enrichment
PV of
• Additional margin / profit
• Additional volume
• Cost savings
Market
Approach
Study of transactions
• Guideline companies
• Guideline transactions
• Industry benchmarks
• Comparable acquisitions
• Comparable licenses
Analysis of the financial & economic impact of IP Assets will employ one or more of
these methodologies

10. The IP Valuation Process
Two types of calculations:
• Apportion future benefits to the IP, calculate present value of
apportioned future benefits
• If a license is reasonable, or if using a Relief from Royalty calculation,
apply a royalty rate to a measure of future benefits and check if both
licensee and licensor will benefit from the transaction
Both methods require a reasonable forecast of future benefits

11. Forecasting Future Benefits
Asset Remaining
Life (Years)
Cash Flow ($)
Asset
Value ($)
IP: Remaining Life, Cash Flow & Value
• IP and the products that use IP have life
spans
• Companies can expect perpetual
growth, IP cannot
• Benefits from the IP will grow, peak and
then decline as other IP and other
products take their place
Guiding Concepts
Total Contribution
Patents
IP: Relative contribution
Trademarks
& Other
Intangibles
Time
Products & Businesses
Business Revenues
Product Life Cycle
IP Remaining Life
Benefit
Today’s
Products
Products
In-development
Future
Products

12. IP Valuation & Apportionment
Business Value > Value of IP Assets owned by the Business
Apportionment: Identify the portion of future benefits
derived from use of the IP Assets
Present
Value of
Expected
Future
Benefits
Value of
Business
Intangible
Assets
Tangible Assets
Copyrights
Patents
Intangible
Assets
Tangible Assets
Trademark
IP depends on other assets and resources in order to generate economic benefits

13. It boils down to apportionment
Apportionment Framework

14. Value of
Trademark
Forecast Profits x Apportionment =
$1,000
year 1
x =
$150
year 1
PV of Future Benefit
Apportionment Results
Analysis Type Low High
Website Analysis 5% 20%
Company Language 15% 25%
CUT 8% 12%
Use
% of Profits to IP
15%
= $603
Trademark Valuation Example

15. Apportionment Tools
Use as many as feasible
• Website Analytics
• Social Media Analysis
• Scoring Analyses
• Company Language Analysis
• Comparable licensing transactions
(“CUT”)
• Excess profits (“CPM”)
• Feature count and comparison
• Marketing Mix Analysis
• Promotional Use Analysis
• Surveys / Interviews /Focus Groups
Tools to Apportion Economic BenefitsApportionment Framework
What is the value of this box?
Present
Value of
Expected
Future
Benefits
Value of
Business
Intangible
Assets
Tangible
Assets
Copyrights
Patents
Intangible
Assets
Tangible
Assets
Trademark

16. The Apportionment Model
Present
Value of
Expected
Future
Benefits
Value of
Business
Intangible
Assets
Tangible
Assets
Copyrights
Patents
Intangible
Assets
Tangible
Assets
Trademark
Applies the Apportionment Framework
• Value of Entire Business
• Forecast each source of
revenue (Products & Services)
• Identify Key Assets &
Resources (IP and Intangibles)
• Develop Apportionment Rates
• Value the Forecast
Apportionment Rates
• Apply concept of Equal Values
Framework of the Model
6 Step Process

17. IP
Marketplace
Product
Marketplace
Valuation Using a Licensing Framework
Licensor
Transaction requires benefit for multiple parties
For Licensee
Value = Revenue –
Compensation Paid
(often a Royalty)
Licensee
Customer
For Licensor
Value = Royalty – Cost to
Develop, Own & SupportIP Compensation
Product Revenue

18. Value to Both Parties
Both parties
expected to
benefit from the
Opportunity
Period 0 1 2 3 4 5
Forecast Licensee Sales 1,000 1,300 1,495 1,645 1,727 1,761
Growth Rate 30% 15% 10% 5% 2%
Annual Royalty Rate 8% 8% 8% 8% 8%
For IP User (Licensee)
Up-front payment (50)
Annual Fee (5) (5) (5) (5) (5)
Additional Profit Margin 15% 20% 15% 10% 5%
Additional Profits - 195 299 247 173 88
% of Sales Royalty - (104) (120) (132) (138) (141)
Total Benefits (50) 86 174 110 30 (58)
Present Value @ 25% (50) 69 112 56 12 (19)
Value of IP to Licensee 180
For IP Owner (Licensor)
Up-front payment 50
Promotions Commitment (130) (150) (82) - -
Promotions Commitment % 10% 10% 5% 0% 0%
Annual Fee 5 5 5 5 5
% of Sales Royalty 104 120 132 138 141
Total Benefits 50 (21) (25) 54 143 146
Present Value @ 20% 50 (18) (17) 31 69 59
Value of IP to Licensor 174

19. Finding a Reasonable Royalty Rate
Income Statement
Revenues
Gross Sales 1,000 100%
Discounts 5 1%
Net Revenue 995 100%
Cost of Sales 450 45%
Gross Profit 545 55%
Operating Expenses
Sales & Marketing 100 10%
General & Admin 75 8%
Research & Development 50 5%
Depreciation 35 4%
Other 15 2%
Total OpEx 275 28%
Operating Income 270 27%
Other Income / (Expense)
Interest, net (55) -6%
Non-recurring (45) -5%
Sale fo Assets 85 9%
Total Other Income (15) -2%
Pre-tax Income 285 29%
Tax Expense (100) -10%
Net Profit 185 19%
Not all
royalties are
the same
Best for Licensor
Best for Licensee
FinancialRisktoLicensee
$ / Unit made
$ / Unit Sold
Gross Sales ($ invoiced)
Gross Sales (Collections)
Net Sales
Gross Profits
EBIT
Net Profits
Level of Benefit Drives the Royalty

20. Royalty Rates
A reasonable royalty considers:
the level of benefit and the allocation of roles
Licensor Activities
Research/
Develop
Design&Test
Regulatory/
Approvals
Manufacture
Market
Distribute
Service
Adopt
Licensee Activities
Allocation of Roles Drive the Royalty

21. Bringing it all Together
Intellectual
Property
Valuation
&
Key Concepts
Why value, and What IP?
Apportionment
Royalty Rates & Reasonable
Compensation
Present Value Calculations /
Discounting
Forecasting Future Benefits

22. Thank You
Brian Buss and Doug Bania

23. Nevium Intellectual Property Solutions
Nevium provides solutions for valuing, managing and monetizing intellectual properties and intangible assets.
We work with entrepreneurs, corporations, legal counsel and IP owners to analyze and maximize the value of IP
and intangibles such as copyrights, trademarks, patents, brands, rights of publicity, websites, customer lists,
social media activities, new technologies, and other proprietary assets.
We are dedicated, experienced managers who provide clear, comprehensive and thoroughly researched
analyses, reports and evaluations. Our principals have a CFA, CLP, an MBA and an MA with over 30 years of
combined business experience. We have worked with clients from a wide range of industries, including:
apparel, food, medical technology, not-for-profit, entertainment, transportation, publishing, airlines, music,
retail, sporting goods, manufacturing & distribution, photography, trade associations, education and
professional services.
The Firm’s experience includes:
• Valuation of brands, patents, trademarks, copyrights, rights of publicity, technologies, domain names,
customer relationships, and other proprietary assets
• Expert opinions and testimony have been accepted in Federal Court, US Tax Court, State Court, arbitration
and mediation
• Calculation of economic damages and profit apportionment analyses
• Damages due to trademark and trade dress infringement in Lanham Act claims
• Quantify profitability of strategic alternatives for IP owners seeking new means to derive additional
revenue and profits from their IP portfolio
• Reasonable royalty and transfer pricing investigations
• Due diligence and transaction advisory for buyers, sellers, licensors and licensees
• Pricing studies and optimal pricing strategies