Exploitation

• Author: Russell L. Parr
• Profession: President of Intellectual Property Research Associates
• Pages: 175-175

PART III

EXPLOITATION

In Part II of this volume, “Valuation,” we explored the means for determining an absolute,

fee-simple value for intellectual property. These values are a walkaway price—the amount

at which the owner transfers all rights to intellectual property. In other instances, they rep-

resented the value of specic assets to a going concern as part of the going concern—value

in use. This part of the book delves into another measure of value.

Part III looks at strategies for exploitation of intellectual property and focuses on joint

ventures and licensing. These forms of exploitation require a sharing of intellectual property

and the burdens of exploitation. Consequently, the values previously discussed must be

allocated between separate parties. For joint ventures, a division of ownership is required,

and for licenses, royalties dominate the relationship between licensors and licensees.

Royalty rates are another form of value. They represent the economic foundation of

licensing and consequently deserve and receive their own chapters in this book. Royalty

rates are a form of value in that they set the price at which licensors will allow others to

use a limited portion of their intellectual property rights. Instead of the prices being set as

lump-sum amounts, they are set on a pay-as-you-go basis.

Joint ventures require special attention, because such alliances require the establishment

of methods for appropriately sharing the economic benets of intellectual property rights

contributed to alliances. Sometimes royalties are involved in these transactions, but some-

times an allocation of ownership in the joint venture turns on the value of the intellectual

property rights contributed by the joint venture partners.

This section of the book focuses on the licensing and joint venture strategies for exploit-

ing intellectual property.

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