Intellectual Property Valuation Risk Management

 

The strategic management and reduction of IP risks is another significant aspect about intellectual property valuation and protection in the modern economy.

In developing such programs, businesses of various sizes and purposes are driven by the same goals:

• to determine what a risk-sensitive intangible asset is.
• to handle new and growing risks to intellectual property.
• given limited money, to appropriately deploy available risk resources; and
• to comply with the legal and regulatory framework in which they operate.
• In this environment, several trends are developing in the domain.

First, IP is increasingly becoming a business/strategic issue, as evidenced by the growing number of companies attempting to leverage the value of their intellectual property, form joint ventures based on IP, profit from the value of their patents, and use IP as a central tenant of an M&A strategy.

Second, IP risk management is shifting from a defensive to an aggressive strategy, which will have a big impact on companies' total risk management strategies.

Third, a "collective relationship" approach for risk management is emerging, and technology advances are accelerating its development. As businesses seek more efficiency, enabling technology such as cloud computing will allow for more defined sharing of intellectual property. In tandem with this trend, the increasing sharing of private information raises complicated issues that will be at the heart of risk management strategy development. Specifically, who is responsible for preserving the IP's integrity and security while it is in electronic, sharable form?

While Intellectual Property Valuation risk may be a hazy and confusing subject, creating risk management methods to handle it requires the application of many programmatic elements, including defining the value of the company's intellectual property and then detecting, analyzing, and evaluating risk effects.

While such procedures may be difficult to implement, the realities of today's business climate need a thorough valuation and risk mitigation effort in order to achieve an organization's intellectual property's upside potential.

Risk Transfer for Intellectual Property:

Intellectual Property Warranties and Representations:

IP representations and warranties infringement liability insurance, which is commonly associated with mergers and acquisitions or a purchase agreement, is one of the least well-known and most widely used types of coverage. It functions similarly to title insurance in house transactions in that it verifies that the IP involved in the transaction is genuine.

IP Value Insurance:

IP value insurance is the final kind of risk transfer product, and it is a direct loss cover rather than a defensive cover. It is triggered by legal claims against intellectual property valuation that result in a loss of income or value due to the invalidity of findings or other legal claims against patents in an insured's portfolio.

IP Enforcement Coverage:

IP enforcement coverage is a fund set up by insurers to compensate the insured for legal costs incurred in enforcing or protecting its intellectual property rights against infringement. It gives IP owners the funds they need to pay for legal costs and expenses when pursuing infringers. This policy does not protect you against counterclaims or losses. Contractual disputes and action against a third party for non-payment, enforcement of an agreement to compensate the insured, and action against the insured for violation of a stated agreement may all be added as optional extensions.