DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

VISAKHAPATNAM, A.P., INDIA

INTELLECTUAL PROPERTY RIGHT

DR. SREE SUDHA P

VALUATION OF TRADEMARKS- GLOBAL PRACTICES

SANSKAR JAIN

ROLL NO. 2018080

SEM 5
ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to my teacher who gave me the golden
opportunity to do this wonderful project on the topic which also helped me in doing a lot of
research and I came to know about so many new things I am thankful to them.
Secondly, I would also like to thank my friends who helped me a lot in finalizing this project
within the limited time frame.
AIMS OF THE STUDY/SIGNIFICANCE OF STUDY

Aim of our study is to observe valuation of trademarks- global practices

RESEARCH METHODOLOGY

Doctrinal

SCOPE OF THE STUDY

Wide
 CHAPTERISATION

1. INTRODUCTION

2. PROCESS AND METHODS OF VALUATION

3. COMPARATIVE ANALYSES OF THE METHODS

4. FACTORS AFFECTING THE VALUATION

5. ACCOUNTING IN ACCORDANCE WITH THE INTERNATIONAL

ACCOUNTING STANDARDS

6. CURRENT SITUATION

7. MAIN TEXT

8. OTHER INTERNATIONAL EVALUATION STANDARDS

9. CONCLUSION AND RECOMMENDATIONS

 ABSTRACT

The main goal of this paper is studying the concept, the context and the different forms and
techniques of valuating trademarks as a valuable asset of an organisation in theoretical
manner. In today’s global economic societies and open market systems, knowing the true
value of trademark can help a company in optimising its management actions, create useful
marketing strategy and gain further financial benefits. If trademarks are to be seen as added
capital to the companies, they first need to be officially registered, so they can become a
useful and manageable asset. The reasons why a certain mark should be valuated are also
elaborated, following the procedures of extracting the value of the company, the brand and
the value of the goodwill from that of the trademark. The paper also focuses on determination
of the true value that certain marks possess both to their owner and to the processes that it’s
used for, using scientific and empirical methods. The key findings of trademark valuation
techniques can be seen as a useful tool for creating organisation’s strategic planning, and
fulfilling its financial goals.
INTRODUCTION

The rights that are arising from the continued use of certain trademark, as a part of the
Intellectual Property (IP) rights, have a significant impact on the direct economic benefits of
every economy. 1 The trademark or the mark itself, despite the area of usage, its specific
nature, the way and the form of use, it’s familiarity, or the territory of its formal registration,
represents a reflection of certain company’s innovation and creativity, that are no more large
or multinational corporations, but more frequently SME’s. Namely, small and medium
businesses in their never-ending struggle for better market positioning are the ones that are
taking the initiative in creating and trading with these kind of intellectual capital, and not just
on a basic local or regional level, but on an global level as well In a most basic level,
enterprises are tending towards using the trademarks to signalise their (potential) clients that,
their goods and services are marked with certain constant quality. Having this in mind, they
are actually reducing the consumer’s alternative in looking-up for goods and services with
similar characteristics, for which they’re charging a relatively higher price. Hence, higher
prices lead to higher profitability, until eventually; the pressure of the open market
competition does reduce the profits to certain – more acceptable level. 2 But also, marks have
this power for turning a common product/service into status symbols (Alfred), even if the
products that are attached on haven’t been specially and visibly improved. One can conclude
that, this particular function justifies all the efforts spent on researching, investing and
actively using the marks in organisation’s everyday business matters. By analysing the
economic functions of the trademarks, one must not forget to mention the active role that
certain markets and consumers have on becoming a successful (or unsuccessful) trademark.
Trademark do not, end they never do exist in a vacuum, but they are only a part of one big
and complex system of cognitive and emotional elements transformed into series of actions,
that are in the constant shadow of different micro and macro sociological, economic,
political, legal, technological, geographical and cult urological changes. In that context,
trademarks are suitable for generating profits, only as a result of its own values, that clients,
employees and the other stakeholders are contributing towards the visual identity of the

1
Hatziprokopiu M., Naumovski G., Stojkov A., Stefanoski Lj.(2007). Understanding the Economics of
Copyright, Magaziine for legal theory and practice “Legal life” 56 (13), pp. 343- 354.
2
Landes W.M. and Posner R.A. (1987) Trademark Law: An Economic Perspective, Journal of Law and
Economics.
products that they find themselves attached to.3 When considering the context of trademark
valuation, and its undeniable role in a company’s environment, one must take into account
that the trademark, as input, should be observed as interdependent with the other assets
correlation with it. In practice, this point of valuating similar assets is called “package” or
“bundle of assets”.4 For example, the intangibles assets that are used for marketing purposes
shall be valuated as “integral marketing package”. It that way, beside the trademark, other
assets such as: the name of the product/service, industrial design, the packaging, corporative
name, the logo, and in recent times even the domain-name5, have broad influence on the
mutual intensifying of their combined meaning, and along with it – with their combined
value. There are many situations, where trademark valuation can be relevant. These situations
fall into a common “set of categories”6, such as: Financial securitisation and collateralisation;
Insurance policy; Organisational activities (re-organisation, mergers, acquisitions and
liquidation); Litigation and dispute resolution; Accounting; Commercial transfers;
Management information etc.

PROCESS AND METHODS OF VALUATION

Besides the purpose of the valuation and the areas of application of the valuation, the context
in which a certain trademark is valuated may be the single most important element of the
final value of the mark 7, In that matter, if the mark is valuated in the context of a large
international company, which has well trained personnel and managers, huge capital, an
effective marketing program and excellent distributive channels, it is almost certain that the
trademark owned by this kind of company will have higher market value than in the “hands”
of, let’s say a small local business in that same business sector. Some of the most significant
methods of trademark valuations, in the same time of other intangibles as well, are considered
the following basic quantitative methods: 1) The Cost-based Method – measuring the
replacement value of the mark; 2) The Market-based Method – measuring the value of the
trademark thru fair market supply and demand and 3)The Income-based Method (Economic
Method) – measuring the value of future economic worth of the trademark.8 Along these

3
Aldred J.(2008). Economic Rationale of Trademarks: an Economist’s Critique in Bently L., Davis J. and
Ginsburg J.C. Trademarks and Brands: an Interdisciplinary Critique (2008) Cambridge: Cambridge University
Press, p.175.
4
Haig D., Heberden T.(2003), Doing the Numbers, TMW, p. 156.
5
Naumovski G, Dusan Popovic.(2011): Information Technology Law, Iustinianus Priuns Law faculty, Skopje.
6
Supra note 4.
7
Martin, D. and Drews D. (2006). Intelectual Property Valuation Techniques, IP Metrics.
8
Smith G. (1997). Trademark Valuation, John Wiley & Sons, 1997.
“quantitative methods” which task is to ‘simply’ measure the exact numbers (expressed in
financial terms of ‘profit’ or ‘loss’), there are also other “qualitative methods” that are based
on measuring the other – non-financial elements, such as: feelings, thoughts, emotions etc.
Some of the authors consider such a divide inappropriate, underlining that both groups are
taking into consideration more or less, all the qualitative and quantitative aspects of the
valuation at the same time.9

VALUATION PRACTICE BY THE COST METHOD

The Cost-based Method practically is made of two different approaches, that can determinate
the real value of a trademark. They are the following: 1)Trending historical costs – or the
costs used in developing the mark in current prices, including all direct and indirect (ex.
consultancy, advertising, package design) expenditures and 2) Re-creation costs – or an
estimate of all the expenditures and efforts made to create a new mark with the same or very
similar characteristics with the original trademark.10

ILLUSTRATION:

In this case study the company is committed to the development of the trademark “NEO
chair” labor costs, material costs, etc. In addition to seeking the historical cost of the
investment in trademark development costs, due to the cost method here on the trademark
value plus a percentage of the compensation opportunities estimate.

As using the cost method to estimate the cost spent to develop the intellectual property,
trademark first thing you need to evaluate the value of a trademark, it is important that the
calculation of the cost of acquisition below.

 Salary and remuneration of those who engage in trademark development.

 Costs of project promotion.
 Common costs for clerical staff and trademark professionals.
 Raw material used in the development process.
 Trademark development costs (fees, etc.).

9
Ulmer M (2003). Latest research on the valuation on intellectual capital: Models, methods and their evaluation,
Universitat St.Gallen..
10
Smith G. (1997). Trademark Valuation, John Wiley & Sons, 1997.
Our product development costs are trademarks completion of the preparation of the
production personnel engaged in trademark development costs incurred to develop (March
2014-October 2014), Labor costs, trademark analysis, advertising, consulting rain, costs such
as fees 55.081 million the circle.

The estimated capital investment for an ergonomic chair is “NEO chair” with 50 million won.
It is estimated to have been based on the actual cost to register (October 2014) from the
trademark applied to 50 million won, the first outturn based on contributions (February
2014), office rent, furniture and the like costs.

Patents relating to intellectual property, such as business opportunity compensation are

typically determined in the range of 1 to 10 times. In a recent valuation, but usually three
times and evaluation assets. Considering that the same trademark, business opportunities
compensation will be calculated at twice the cost of the investment. Thus, the business
opportunity is estimated at about 100 million won compensation11.

When assessing the value of the trademark cost method by considering the overall cost is
estimated to 205.081 million won.11

VALUATION PRACTICE BY THE INCOME METHOD

The Income Method is defined as current value of all future revenues made from the use of
the trademark during its lifetime, considering all the risks during the time of making those
profits.12 Some authors, (Gream, Günther) consider that the Income Method is actually
extracted from the older “Economic-based Method” which measures all the benefits using the
trademark in the future, with the special accent to the measurements of the future fees to the
owner, if he decides to license it to some other side.13 The valuation of the mark using this
particular method is performed through calculating the revenues which would be made using
the trademark in the future business operations from its owner, reduced on a today prices
level (or prices that are valid on valuation period/s), in order to determine the real (current)
11
FERNANDEZ P., (2017), Company Valuation Methods, in https://ssrn.com/abstract=274973 or
http://dx.doi.org/10.2139/ssrn.274973.
12
Prashar S. and Rashmi K. A.(2009). The Intellectual Property Valuation: A case of Jet Airways, the
innovative and critical times ahead, an Indian Perspective, World Academy of Science, 2009.
13
Gunther M. (2006). Trademark Valuation). The Berkley Electronic Press (bepress –
www.bepress.com/ndsip/art7).
value of the same mark. Estimating the future profits is based on previous owner revenues, or
other comparative revenues from similar competitors on the same market. The basic
standpoint of this method is the facts that an enterprise which doesn’t have its own brand is
willingly ready to pay certain amount of money that will legally allow it to put an existing
trademark on its products, eventually leading to increase of the prices of its own products on
the market, and making some extra profits. Therefore, the need of determination of the
individual revenues which would be made by licensing the trademark is the primary objective
of this method.14 For better understanding the Income Method it is crucial to have elementary
understanding of the “time value of money”. The concept of “time value” explains that an
amount of money received immediately is worth more than the same amount received in the
future. Apart from the influence of the inflation on the real value of money, there is a
continuous earning interest on it. The term used for the current value of money to be received
in future is called “present value”. Thus, the future income, generated by a trademark, must
be recalculated to the present value to yield realistic analyses. There are also several approach
techniques that are used of performing the Income Method: Residual; Premium Price (PP) or
Earnings Split (ES); Relief from Royalty (RR); Discounted Cash-Flow (DCF) and Real
Options Method (ROM).

ILLUSTRATION:

Prerequisites for evaluating the trademark by the income approach are as follows.

 The company has a manufacturing plant was completed in late 2014 began
production and sales will start in 2015.
 Sales of the total market size, market share, taking into account the product’s
marketability, including one year of primary verbs are presented on the basis of
estimated sales plan is assumed to increase by 10% annually (Bank of Korea,
Financial Statement Analysis, 2014).
 Estimated Income Statement is prepared based on the projections presented by the
company.
 Initial direct development (70,000,000 won) is financed by debt capital.

14
Yelnik A.(2009). From the point of view of commercial value of trademarks, do current laws sufficiently
protect brands from infringement?, MARQUES Annual Conference, 2009.
  Non-operating expenses (financial expenses) are calculated using the average
interest burden (10%) of the borrowed capital.
 Head office and factory building is assumed to be a rental, machinery and
equipment (useful life: 10 years Residual value: 0) are amortized on a straight-line
basis.
 The additional investment is that there is no facility since 2016.
 Increase or decrease in working capital due to the increase or decrease of such
inventories, trade receivables, trade payables are assumed not.
 The economic life of the trademark is assumed as five years, no residual value is
assumed.

The company is assumed to start selling since 2015, revenues are assumed to increase by
10% per year, based on the first year (2015) sales plan presented by the company. The sales
volume and sales is calculated by the three models developed by the company based on
market conditions and characteristics (price of product A: 210,000, product B and product
sales in the C: 180,000). The sales costs are applied to 45% of the total turnover on the
assumption that the initial cost structure persists. The selling and administrative expenses
consist of salaries and variable costs advertising costs for the operating characteristics of the
fixed nature of public relations personnel and development staff. The corporate tax rate of
25% applies. Trademarks of the economic value of the life and value of a discounted cash
flow revenue reduction of five years with five years to see the best of 270,605,000 (discount
rate changes and adjustments Technical contributions from the lowest of 248,166,000 (fixed
discount rate, and general technical contribution apply) applied) were evaluated in a range of
up to. In summary, the results of that appraisal seems trademarks and Table 7. 15

THE RELIEF-FROM-ROYALTY METHOD

Trademarks are commonly sold internationally, especially in the groups that centralize them
in ad hoc companies, called royalty companies. An easily applicable empirical method is
based on the determination of the "relief-from-royalties" that the owner of an intangible
resource would have required to authorize third parties to exploit the trademark (it is also
known as the "consensus price" method). The relief-from-royalties method is particularly

15
Ibid.
suitable where it is desired to arrive at the determination of an exchange value of the
intangible resource. The plausible market value of an intangible resource can be estimated as
the discounted sum of the relief-from-royalties (which the company would pay as a licensee
if the intangible resource were not owned) discounted, with a time horizon of at least 3-5
years and in any case not longer than the contractual deadline. The concept of reasonable
royalty can also be relevant in the context of litigation in the quantification of the damage for
unlawful use of the trademark. The general principles of transfer pricing have last been
revised by the OECD guidelines in July 2017 (http://www.oecd.org/ctp/transfer-
pricing/transfer-pricing-guidelines.htm) which define royalties as “payments of any kind
received as consideration for the use of, or the right to use intellectual property, such as
copyright, patent, trade mark, design or model, plan, secret formula or process”. These
normative and interpretative sources tend to identify the guiding criteria to establish what the
"normal value" should be in the operations, referring to the general criterion of prices
determined under the regime of free competition and therefore responding to a correct
economic logic. The ministerial circular indicates congruent rents of up to 5% of turnover.
This percentage can fluctuate between minimum and maximum values and reference must
also be made to the type of market in which the company operates. In exceptional cases,
relating to famous brands, especially in particular merchandise sectors (high fashion, etc.),
the percentages can also be higher.16

THE INCREMENTAL INCOME METHOD

The higher the expected economic operating results associated with an intangible resource,
the greater the resource itself. Therefore the contribution of an intangible asset to the business
profitability can be measured through the differential income method. The value of the
trademark so corresponds to the current value of the cumulated expected differential income.
The brand can therefore be assessed if and inasmuch as it is the source of tangible differential
economic benefits and potential future utilities, which are expressed in a premium price,
intended as the price differential of the product characterized by a strong component of
recognition on the market. The failed or symbolic accounting and capitalization of costs
associated with the brand impacts on the one hand in terms of non-depreciation and on the
other of potential undervaluation of shareholders' equity, with a book value lower than the

16
FARRIS P., GREGG E., CHINN B., RAZURI M., (2016), Brand Equity: An Overview, in
https://ssrn.com/abstract=2974738.
market value. The incremental income method can be used in the estimation of the trademark
counterfeit damage, to quantify the "lost profit" of the owner or - specularly - the
"counterfeiter's profit" and his or her illicit enrichment (unjust enrichment, gain based), also
on the basis of a reasonable royalty, which leads to the alleged royalties mentioned above.
The estimate of the compensation for damages (restitutionary damage) also in the form of
compensation can even be equitably conducted using the well-known institutions of the
emerging damage and loss of earnings. The unfair appropriation of differential results
qualifies the damage perpetrated by the infringer, whose occasional or repeated nature and
purpose must be assessed.17

VALUATION PRACTICE BY THE MARKET METHOD

The very basics of this valuation method are laying in the opportunities in comparison of the
similar mark on the market, which correspond with the value of some other mark, with
similar attributes, previously bought by some other side. 18 We can find the same principle in
the real-estate markets – where for example, a family house of 200m² with three bedrooms
and two baths in a relatively quiet neighbourhood is compared with another house with
similar parameters in order to determine its real value. However, in order to perform such
comparison, the criteria of an “existing open and active market” are obligatory. Having in
mind that the trademarks, along with the other parts of IP are truly unique by definition,
finding a mark that has similar attributes as a comparison model can be extremely difficult
task to perform, for that purpose, before even beginning the process of valuation, one must
provide the key comparable elements such as: the type of the trademark, the type of the
industrial/business sector, the geographical area, life-time of the mark, and etc., in order to
get real and acquire end results. 19

The estimate of the market value is based on the screening of transactions involving
intangible resources, for sale or license, using the international databases currently available
on the web that can provide useful clues about their value, even from a fiscal point of view of
comparison, to estimate the "normal value" of transactions between independent
counterparties for the purpose of transfer pricing. The market approach is consistent with the

17
SCHILLING M.A., (2010), Strategic Management of Technological Innovation, in “Protecting Innovation”,
9.
18
Supra note 13.
19
Supra note 7.
principle established by IFRS 13 according to which the fair value must be determined by
adopting the assumptions that market operators would use in determining the price of the
brand, presuming that market operators act to satisfy their own economic interest in the best
manner. Commonly, the comparative analysis is based, on the Price/Book Value index, which
compares the stock market price (of a listed company) to the net equity, giving rise to a
capital gain (if the index is greater than 1) in part attributable to intangible assets.20

COMPARATIVE ANALYSES OF THE METHODS

The development of new technologies, as well as the never-ending change of the business
trends obviously leads to up’s and down’s of certain companies or whole industries from the
face of the markets, and inevitably to the fading out of certain well-known trademarks. Who
would have known that the launching of a new iPod will increase the value of the “Apple’s”
trademark for incredible 44% in just 2 years (from 2003 to 2005)? If someone could predict
it, today he/she would be rich, having in mind that the “Apple” shares value had increased by
360% for those 2 years period.21 Or did someone imagine that the jump of Felix Baumgartner
of “Red Bull Stratos” can increase the mark value of “Red Bull” for 106% in just 15 days?22
The cost-based method is relatively fast and easy to perform in cases when there aren’t any
big economical activities behind the valuated mark or at cases when its owner is in the start-
up phase of trademark usage. This method is also suitable in cases in which the trademark
should be shown with maximum value, in cases of selling or licensing. The marked-based
method on the other hand, is excellent choice when there is open and active market of
trademark transfers in terms of selling or licensing certain marks. It’s core advantage is the
fact that one particular mark can be compared with other marks on the market that share
similar characteristics, and its acceptance of determination of the value according to the
market equilibrium - or the current supply and demand. It seems that the income-based
method, along with its numerous different techniques, is currently the most useful method of
determining the precise value of a certain trademark. This conclusion arises as a consequence
for measuring the additional profits that its owner would have made using the valuated mark,
unlike selling other – generic products on the market. Ultimately, the real value of a

20
Rakesh Gupta, Valuation of Trademarks- How do I know what my trademark is worth, IPLEADERS ( Oct 23,
2017), https://blog.ipleaders.in/valuation-trademarks-know-trademark-worth/.
21
US Trademark Register, Available at:www.uspto.gov.
22
DachisGroup (2012), Available at http://dachisgroup.com/2012/10/7-social-campaign-insightsfrom-redbull-
stratos/.
trademark is valuated according to the additional benefits that it brings to its owner. In most
recent times, more and more experts are focusing on some kinds of combinations of the
known methods in order to have more accurate results.23 Although the income-based method
is more often seen as “closest to perfect” and primary valuation method,24 in some occasions
it is only the best when a combination or a synthesis of various methods are being used, just
to confirm the previous or bring some new results on the table. 25

FACTORS AFFECTING THE VALUATION

The single most inseparable way of trademark valuation process is the acknowledgement of
the different factor that can affect the outcome of the valuation performance.26 One should
have in mind that all the factor cannot be always well defined or explained, but sometimes
they can be the single most important factor that can determine the value of a certain
trademark both from client’s or company’s perspective. Yet, there are several perspectives
that allow us to elaborate the different factors that can have major influence on the valuation
processes. The following s.c. ‘determination factors” are considered inevitable when
performing a trademark valuation: legal factors; contractual; physical; technological;
functional; economical; and analytical factors. From trademark perspective, the most
important are both economical and contractual factors.27 At the end, it is always up to the
owners to determine which factors and to what extend can be the real determinations’ of the
end value of their trademarks.

ACCOUNTING IN ACCORDANCE WITH THE INTERNATIONAL ACCOUNTING

STANDARDS

According to the accounting principle OIC 24, par. A.14, the trademark (together with the
firm and the sign) is one of the distinctive symbols of the company (or of one of its
manufactured and/or marketed products) and can consist of any sign that can be represented
graphically, including emblems, words, sounds and shapes of the product or its packaging.

23
Supra note 14.
24
Sinclar R. (2009). Value of Trademarks and Brands, p.503.
25
Greenhalgl C. and Rogers M. (2005). Trademarks and Market Value in UK Firms, Oxford Intellectual
Property Research Center, p.11.
26
Groves P.J (1997). Intellectual Property Rights and Their Valuation: A handbook for bankers, companies and
advisors, 1997, p.30
27
Roosma, Kerr & Reilly (2005). Intellectual Property Lost Profits and Economic Damages Analyses,
Williamette Management Associates Insights Quarterly Journal, p.5
The una tantum sums paid to obtain a license, a concession or a trademark or other similar
right can be capitalized (§ A.15). Both, the internally produced brand and the brand
purchased from third parties, are capitalized under intangible assets. The costs related to the
internally produced trademark can essentially be attributed to the internal and external direct
costs incurred to produce the distinctive sign according to the criteria described in relation to
the development costs. Costs incurred for starting the production process of the product
protected by the trademark and for any promotional campaign are excluded from the
capitalization (§ A.16). The amortization period is normally linked to the period of
production and exclusive marketing of the products to which the trademark refers, and if not
foreseeable, over a period referable to the useful life. 3.1. Trademarks and international
accounting principles: impairment test and inapplicability of fair value The international
accounting standards normally require the use, instead of the historical cost, of the fair value,
defined by IAS 39 (now replaced by IFRS 13) as the consideration for which an asset could
be exchanged, or a liability extinguished, in a free transaction between knowledgeable and
independent parties. This is the evaluation method that can be defined as "market" or
"current", also defined by the EU directives "fair value". Here too there are obvious
similarities with the tax concept of normal value. IAS 38, about intangible assets, explicitly
excludes the possibility of applying fair value for brands, due to the uniqueness of this asset
and, therefore, its difficult comparability with similar elements. Intangible assets with an
indefinite useful life, such as trademarks, are no longer eligible for the systematic
amortization and must be annually - at each balance sheet reporting date - subject to the
"impairment test", which consists of a periodic review of the intangible value recorded in the
balance sheet, applying valuation methods based on the discounting of future cash flows
and/or market-based methods. 3.2 The evaluation standard ISO 10668 The standard 10668
was published by the ISO (International Organization for Standardization) in Autumn 2010: it
defines and identifies a methodology for assessing the economic value of brands, defining the
objectives, approaches, evaluation methods and selection methods and identification of the
starting data, to be used in the evaluation process, also in order to guide the evaluator,
reducing the margins of discretion and proposing a sort of evaluation "protocol". ISO 10668
is aligned with the existing valuation standards, the IAS/IFRS accounting standards, but
includes in the valuation aspects that are not solely economic and financial, but linked to
legal and behavioural aspects, which are an integral part of the brand value judgment. The
valuation principles ISO 10668 apply to the valuation of trademarks in those situations in
which it is necessary to have a fair value, comparable to a fair value of the brand sale. The
standard ISO 10668 defines the analyses and the steps necessary for the evaluation of the
brands, which can have a legal, behavioural or financial nature. The three steps are essential
to evaluate existing brands, new brands and in the definition of the impact of brand extension
strategies. The second aspect to be taken into consideration in the evaluation of brands, based
on the standard ISO 10668, takes place through behavioural analysis, which allows the
assessor to gain a complete opinion on customer behaviour and the value perceived by the
distribution network and by customers in markets where the brand is widespread, with
particular reference to its positioning in relation to its competitors. 28

CURRENT SITUATION

Recent economic and environmental change, depending on the proportion of the corporate
intangible assets, such as trademarks greatly increased, the value of these assets reasonably,
objectively assess the need is increasing.

Therefore, financing, trading, investment decisions, M and A, litigation, is to assess the value
of intangible fixed assets for the purposes of such strategies would reasonably be called the
most important part. However, the ability to assess properly the lack of recognition and of
intangible assets on despite the importance of these intangible assets are lacking

IFRS to the valuation of trademarks at fair value but with the exception that non-marketable
securities, the acquisition cost can be replaced by a well-known professional organizations
calculation of the amount of trademarks that the rules are followed. In Article 29, “Rules on
Appraisal” but to establish the rules relating to trademarks, including the evaluation of
intangible assets has to be determined only by the goodwill of the valuation price evaluation
method of revenue reduction, the evaluation criteria does not specify in detail the possibility
of intervention is to be the valuator’s subjective situation is very high

Is a trademark of enterprise valuation techniques in order to solve the above problems are
situations that require the establishment of valuation criteria that allow you to select a variety
of valuation techniques, and get out on the subjective valuation method. In the proposed
regulations, specifically with reference to the revenue reduction and valuation methods based

28
DORFLEITNER G., ROEBLE F., LESSER K., (2019), The financial performance of the most valuable
brands: a global empirical investigation, Heliyon, 5, 19.
on the case analysis and appraisal cost method performs the actual corporate trademarks are
the purpose of this study is to propose a practical criterion. 29

MAIN TEXT

Factors affecting the value of corporate trademarks are the factors that are derived from the
characteristics that are inherent to the trademark. It can be divided into right and notation,
goods and services, markets, sources, etc externalities “Special Education Accounting
Standards” intangible assets are exclusively and exclusive right to use a certain period of
time. Category is industrial property rights, copyrights, software, software development, etc.
Intangible asset has stipulated that the amount plus incidental costs for development costs or
purchase value of the asset at cost.

“Municipal Rules on Accounting Standards” has been also defined as intangible assets such
as industrial property, with information such as “Special Education Accounting Standards”,
specifies the assessment methods for intangible assets.

This assessment has also increased the need for trademark applications in concrete. The
“Rules on Appraisal” country stipulates that the evaluation of the trademark line to apply the
evaluation method to assess, including goodwill, or goodwill. If this should be the principle
evaluated by reduction in revenue, the method may be used to deal case comparison method
or cost method if this is not fair.

In “Inheritance and Gift Tax Law” and regulations for the valuation of the trademark as one
of the intangible property. The mention of a trademark that directly examine this regulation at
least among the “Rules on Appraisal” and “Inheritance and Gift Tax Law”. In “Inheritance
and Gift Tax Law” due to trademark and is to assess the value based on the income obtained
in the future, it is unclear if that assessment based on the income of the assessment three
years ago. This input costs, but it is difficult to apply in future cases if the value is difficult to
obtain in the future uncertain income estimates, it has the past three years also represents the
future value of income does not matter. Therefore, this case has been commissioned to
complement the emotion rating agencies that are accredited by an appropriate amount. This

29
MACÌAS RENDÒN W., RODRIGUEZ MORALES K., (2013), Brand valuation: a review of interbrandTM
and brand capability valueTM models, in “International Journal of Management Research and Business
Strategy”, 2, 1, 121, in www.ijmrbs.com/ijmrbsadmin/upload/IJMRBS_50e5542908c65.pdf.
eventually leads to ’Rules on appraisal‘ Article 29 Application of the Provisions of goodwill
is connected with problems of its own assessment regulations absence of a trademark. In the
case of goodwill is primarily focused on evaluating the benefits exceed its value and property
values also exceed profits of the business. However, in addition to the case of a trademark
can be accessed from multiple excess benefit side factors such as royalties, input costs in
development, the impact of intellectual property as a factor of the nature and value of many
other problems. Therefore, the evaluation method of complying with the current regulations
of the goodwill that would limit the proper evaluation of its intellectual property, including
trademarks that are important recently. 30

International Valuation Standards Committee as the International Trademark criteria;

trademark evaluation of the (International Valuation Standard Committee IVSC) Standards
and Assessment Foundation USA (Appraisal Foundation) established a unified professional
criterion (Uniform Standard of Professional Appraisal Practice, under USPAP), etc. there.
International tendency of trademarks are evaluated in recent years, interest in the trade marks
evaluation attempting to simulate the new model evaluation trademarks has been increasingly
spread. In utilizing such computer systems address the complexity of the valuation in
accordance with the attempt has been made to raise the predictability. However, there is
currently a lack of interest in spite of this general agreement with the reference method for
the evaluation Trademark yet. According to a survey of UK companies associated with the
trademarks valuation made in 2007 and reported that 52% of the required assessment
methodology, showed that 57% not sure about the current method. USA also in accordance
with GAAP trademarks are the criteria that should be further developed research results have
been reported, in the case of China has conducted a study and review of the claim in
accordance with the standards and the need for improved assessment and trademark
intangible assets associated with the trade office.

In addition, due to the necessity associated with the tax and accounting, as well as require a
rating on the company value, corporate interests are also growing increasingly concerned
about the trademark in accordance with the higher rating. Since these trends are associated
with the reliability of the evaluation results as an opportunity to evaluate Trademarks may be

30
MORO VISCONTI R., (2017), Domain Name Valuation: Internet Traffic Monetization and IT Portfolio
Bundling, in https://www.researchgate.net/publication/319328766_Domain_Name_Valuation_Internet_Traffic_
Monetization_and_IT_Portfolio_Bundling.
exposed shortcomings, the method and criteria relating to the evaluation is to be improved I
have an international consensus has been formed.

Second, as a part of the creative economy has been increasing interest. There are increasingly
becoming topics of interest related to the assessment as part of the ‘creative economy’ that
has an interest in the importance of economic growth. Accordingly, the OECD has an interest
in intangible assets, including trademarks held by related workshops, and the private sector
and the government, academia, and that such interest improve.

Third, the valuation trademarks are influenced by changes in technology and the
environment. Recently, to save time and money because of the highly-developed computer
system and software, while the attention to the complexity that can be performed in model
development evaluation.

Therefore, Trademarks valuation is increasingly being adequately achieved immediate,

positive rating action appears to have made this tendency rather than a passive, too. This
trend has had a profound impact on the assessment as a benefit of the trademarks introduction
and development of new technologies. Therefore, appropriate assessment procedures and
methods, standards also need to be provided regarding the use of assessment tools based on
this technology are also being raised. 31

OTHER INTERNATIONAL EVALUATION STANDARDS

Several international institutions, in their standard setter activity, issue operational and
interpretative guidelines to assess intangible resources; the principles ISO 10668 are
supported by other valuation standards, such as those issued by the Appraisal Foundation. In
June 2012 the Foundation emitted the discussion draft valuation advisory n. 2 ("The
Valuation of Customer-Related Assets"), related to the valuation of assets linked to marketing
and consumers, in the context of financial statement valuations. The International Evaluation
Standard Council has issued the Technical Information paper n. 3 ("The Valuation of
Intangible Assets"), which includes, in the sphere of intangible assets, also trademarks.
Regarding international taxation and, specifically, transfer pricing, the mentioned OECD
Guidelines are relevant. There are also several empirical methods that describe branding

31
Ibid.
models, for the purpose of estimating the economic value of the market; the Brand Asset
Valuator (developed by the consulting company Young & Rubicam) or the Interbrand
method are of relevance. In the context of prospective assessments (business plans, etc.), not
necessarily linked to the expected value of the brands, the ISAE 3400 (Examination of
perspective financial information; http://www.ifac.org/system/files/downloads/b013-2010-
iaasb-handbook-isae-3400.pdf) principle is also relevant. There are also other methods of
evaluation for brands: 1. Interbrand empirical method: the revenues attributable to the brand
are multiplied by an expressive coefficient of the strategic strength of the brand, which
depends on factors such as leadership, loyalty, market, trends, marketing investments,
internationality, legal protection ... Interbrand publishes a yearly report about the best global
brands; 2. financial brand equity: aimed at evaluating the brand in monetary terms and
consisting in the enhancement of a set of assets and liabilities linked to the brand, which
increase (or decrease) the value of a product.32

CONCLUSION AND RECOMMENDATIONS

It seems that, of all the types of IP, the trademarks are generally the most sensitive to
changes, internal or external. Therefore, the process of their valuation is rather complex and
very difficult to execute. According to recent theory and practice, one can conclude that the
trademark are directly addicted to the different valuation methods, and that the results
extracted by those valuations should always be taken with a certain dose of doubt. In the
process of evaluating trademarks, one should always have in mind the fact that the mark
itself, regardless seen as dominance or negligible part of the value of a company, explicitly
decreases in value when excluded out of the context of the products or the services that it is
being used for. Also, the valuation steps and measures undertaken by its valuator should
always reflect the willingness and the desires of the client and his best interest, but in the
same time it must be according to the moral, ethical and legal prescribed norms. There is no
doubt that trademarks have value either by themselves or as an inseparable part of the value
of a brand. Quantifying this value is absolutely vital for the effective execution of a wide
variety of business, financial, legal and strategic activities. It will make for a better future if
all parties involved can achieve a common international focus in developing a codified and
set of practices that are universally acceptable.

32
SIMON C.J., SULLIVAN M.W., (1993), The Measurement and Determinants of Brand Equity: a Financial
Approach, in “Marketing Science”, 12, 1, 28-52.