Values of IP
My guess is that most patent attorneys think patents are the most valuable of IP rights. Well, let’s look at some data.
The ploymerase chain reaction, a technique for amplifying genetic material, was invented by Dr. Kary Mullis in 1983. His employer, Cetus Corp., received the patent; Dr. Mullis was awarded the Nobel Prize. In 1992 Cetus sold its PCR patent portfolio to Hoffman LaRoche for about $700 million.
Recently RIM settled for $612.5 million a lawsuit in which the plaintiff, NTP, asserted that RIM’s BlackBerry personal data system infringed an NTP patent. In view of that, the NTP patent might be said to be worth $1 billion.
These two data points represent, I believe, the top zone of patent value.
What’s the top zone for copyright values? George Lucas’ Star Wars “franchise,” which includes all the Star Wars related products and spin-offs, has been estimated by Forbes to have a value of about $20 billion.
J.K. Rowlings’ Harry Potter series and related products has been projected to have a value of about $12 billion. So this $12 to $20 billion range is probably a fairly representative estimate of the top zone of values for copyrights today.
What might some of the best known trademarks be worth?
How about the Microsoft trademark? Last year Microsoft earned more than $12 billion on almost $40 billion in revenues. Of course, a considerable amount of this income and earnings is attributable to the Windows programs and to technical quality. But other software companies have programs of similar quality. Let’s say that one-third of Microsoft’s 31% profit on sales was attributable to its trademark. The company’s shareholder equity last year was a bit more than $48 billion; the stock market valued Microsoft at $284 billion. If a third of the valuation above shareholders’ equity was attributable to the trademark, then the Microsoft mark would have a value of about $75 billion.
How about Johnson & Johnson - what’s the value of the J&J mark? Using an approach similar to the Microsoft valuation analysis, J&J’s profit was about 20% on revenues of about $50 billion, which might be said to be about twice that of its market segment. The excess of its market value over shareholders’ equity last year was about $142 billion; half of that would be $71 billion, which as a ballpark figure would be the value of its J&J trademark.
As a third example of a company in a competitive market with strong earnings, consider Cisco Systems. Its profit last year was about 23% of revenues, which again might be said to be in the neighborhood of twice the average for its market segment. Its market value exceeded its shareholders’ equity by about $110 billion, giving its Cisco mark a value of $55 billion.
So it would seem that marks of highly successful companies might be said to have a value of $50 billion or more.
From the foregoing analysis, it would seem that trademarks clearly are the most valuable of IP rights.
One notable characteristic of trademarks is that their life is potentially infinite, while the lives of patents and copyrights are both limited by statute. So only trademarks continue to build value with use over the years.
Obviously the above is only a rough approximation of values. I’d welcome your comments about where it went off track, and what you think the most valuable IP right is.