Jacques de Werra for drawing his attention to a note entitled "North Carolina court validates IP valuation methods" which explains the ruling in Vernon v Cuomo, 06CVS8416 (N.C. Super. Ct., March 15, 2010). According to this note, the case, which concerned a statutory buy-out, demonstrates “the extreme difficulty” in valuing an early-stage company with no other assets than untested technology. One of the issues addressed by the court was how to protect majority shareholders from reaping a windfall if the patented portfolios prove to be highly valuable, without requiring them to overpay should the market fail to adopt the technology. Michael Pellegrino, the court-appointed expert in this case, has written a Guide to Intellectual Property Valuation (details here). In this case he deployed "statistical models (simulation algorithms and Monte Carlo simulations) to calculate fair value based on discounted future income" and his approach is said to be “appropriate for this type of business and clearly in the mainstream of IP valuation methodologies".
Writing from my little corner of Europe, I envy the United States for the sheer width and variety of IP valuation issues that get an airing in court and then trickle through into the IP community. Do any of this blog's European readers know of any reported decisions in which judges have passed comment on the acceptability of simulation algorithms, Monte Carlo simulations to calculate fair value based on discounted future income?
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