Experts Highlight Challenges and Solutions in Intellectual Property Valuation to Boost Commercialization

Intellectual property is becoming an increasingly valuable asset in business, yet challenges in valuation and a lack of transaction data continue to obstruct its effective commercialization. Enhancing valuation mechanisms is essential to connect research outcomes with enterprises, expand technology transfer opportunities, and attract investment.

A technology may require years of research and development, but when parties negotiate its transfer, they face a critical question: what is the asset’s true value? This valuation directly influences decisions on transfer agreements, capital contributions, investment attraction, and the ability to bring innovations to market.

For IP owners, valuation underpins the protection of their interests and informs exploitation strategies. Acquiring enterprises rely on valuation to assess applicability, forecast additional investment needs, and estimate profit potential. Investors require reliable valuation data to evaluate risks and opportunities effectively.

Michael Kos, a financial and intellectual property valuation expert at the World Intellectual Property Organization (WIPO), notes that the global business valuation landscape has shifted markedly toward intangible assets. Despite this, the financial utilization of these assets remains nascent, partly due to difficulties in accurately determining their value.

As a subset of intangible assets, intellectual property’s value must be convincingly established before research results can serve as a foundation for transfer, capital contribution, or investment transactions.

Akira Ogawa, a JICA project expert at the Japan Patent Office, stresses that understanding and correctly identifying IP value is vital for strategic planning and making sound investment and business decisions. He emphasizes that valuation is not merely about assigning a number but also about explaining the basis for that value, the conditions for exploitation, and the asset’s potential to generate economic benefits.

The value of a technology can vary significantly between businesses, depending on factors such as the user’s capacity to adopt it, market position, and product portfolio.

Valuation difficulties arise from the inherent characteristics of intellectual property. While research and development costs can be relatively clear, the economic benefits depend on multiple factors including technology maturity, market demand, commercialization potential, and exploitation timeframe.

André Gorius, an expert from the International Association of Licensee Experts (LESI), argues that IP valuation requires simultaneous consideration of technological, market, financial, completeness, and commercialization potential factors.

Legal status also plays a crucial role. Registration status, remaining protection period, and dispute history can directly affect an asset’s value and exploitability. Therefore, before valuation, parties must clarify which rights are being transferred, the technology’s development stage, and any additional investments needed to bring the product to market.

WIPO guidelines highlight that the same invention may have different values for different businesses. An entity with existing production systems, technical teams, and market access can adopt the technology quickly, whereas another may need to invest significant resources and time to perfect the product.

This variability underscores the necessity for valuation to be linked to the actual usage context. Valuations based solely on research costs or owner expectations, without considering exploitation potential, are unlikely to reflect the asset’s true economic value.

Pham Van Binh, Deputy Director of the Price Management Department at Vietnam’s Ministry of Finance, describes IP valuation as a new, complex, and highly interdisciplinary challenge. It requires expertise spanning pricing law, intellectual property, science and technology, finance, accounting, and market operations. Practitioners must understand the technology’s nature, legal status, business prospects, and potential risks.

Data scarcity remains a significant bottleneck. Valuation firms in Vietnam report limited information availability, inaccuracies in discount rate application, and mismatched expectations between IP owners and investors. Although a legal framework for intangible asset valuation exists, practical implementation is challenging.

Currently, three common valuation approaches are used: the cost method, the market method, and the income method. Each offers a different perspective but depends heavily on the quality of input data.

The market method suffers from a lack of comparable transactions, complicating reference price determination. The income method’s forecasts are sensitive to assumptions about revenue, costs, and risks. The cost method, while straightforward, does not inherently reflect future economic benefits.