Friday 30 May 2008

"Spurious precision": a short report

Many thanks to Oliver Rivers for his lively and thought-provoking talk to the IP Finance group on the intellectual property valuation issues that militate against any item of IP having any sort of fixed value at any given time during its life cycle. With experience cutting both ways (Oliver was for several years a record producer before taking the MBA route and ending up in IP valuation), Oliver demonstrated a greater sensitivity to IP rights than do many speakers from the money-and-accounting side of things. He also did two rather courageous things. The first was to take a pharmaceutical patent as a paradigm for his presentation. The second was to try to explain Black-Scholes (right) to an audience more comfortable with Black Holes. But methodologies are, it can be argued, only part of the story: in reality (it seems to this reviewer: these are not Oliver's own words!) that the subjective element--in terms of information supplied by the IP valuation client for the purpose of the valuation exercise -- may be the single most influential factor in reaching the range of values that is the outcome of the exercise.

The audience, made up of IP practitioners, financial consultants, investors and IP proprietors, treated the talk as an interactive seminar, probing Oliver on every point and teasing out the differences between different types of IP right and divergent approaches to valuation--which seem to be based more on an appreciation of probability theory than an understanding of the market itself. With so much questioning and audience participation, the intended 20 minute talk easily spanned a full hour, though thankfully there was enough time to enjoy the wine, nibbles and the view from Olswang's High Holborn office (thanks, by the way, for the hospitality).

If you'd like a copy of Oliver's PowerPoint, email me here and I'll send it to you by (more or less) return.
Also, the IP Finance group is looking for a speaker for August/September. We've had securitisation of intangibles and we've had valuation -- so it's probably the turn of assessment of royalty rates. If you'd like to volunteer yourself or recommend someone else, email me here and let me know.

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