IP (Intellectual Property) presentation for CS.pptx

IP (Intellectual Property) presentation for CS

1. RRR CHAMBERS Email ID- [email protected] RRR Chambers - [email protected]

2. Valuation under Companies act, 2013 Sec of Companies Act, 2013 Purpose Details Sec 62(1)(c) Issue of new shares Price of such shares should be determined by the valuation report of a Registered Valuer Section 192 (2) Non-cash transactions with Directors The value of the assets has to be calculated by a Registered Valuer Sec 230 (2) & (3) , Sec 232 Compromise, Arrangements, Amalgamations Valuation report in respect of shares, property or assets, tangible and intangible, movable and immovable or a swap ratio report by a Registered Valuer . Sec 236 Purchase of minority shareholding The minority shareholding at a valuation determined by the Registered Valuer . Section 281 (1) (a) and Section 305 (2) (d) Winding up of a company A valuation of assets of the company RRR Chambers - [email protected]

3. Intangible assets under companies act, 2013 Section under Companies Act, 2013 Details Schedule III Separate line item in Balance Sheet under “Non-Current Assets” Schedule II Depreciation/Amortisation of intangible assets – applicability of Accounting standards, RRR Chambers - [email protected]

4. disclosure of intangible assets under companies act,2013 Intangible assets (Schedule III) ( i ) Classification shall be given as: ( a) Goodwill; ( b) Brands /trademarks; ( c) Computer software; ( d) Mastheads and publishing titles; ( e) Mining rights; ( f) Copyrights, and patents and other intellectual property rights, services and operating rights; ( g) Recipes, formulae, models, designs and prototypes; ( h) Licences and franchise; ( i ) Others (specify nature). RRR Chambers - [email protected]

5. Provisions under insolvency & bankruptcy code, 2016 Section of IBC Details Sec (18)(f) (iv) IRP will take control & custody of intangible assets also besides all other assets Sec 36(3)(d) “Liquidation Estate” includes intangible assets including but not limited to intellectual property, securities (including shares held in a subsidiary of the corporate debtor) and financial instruments, insurance policies, contractual rights; RRR Chambers - [email protected]

6. LEGAL PROVISIONS RELATING TO INTANGIBLE ASSETS – National Patents (Amendment) Act 2005 & Patents (Amendment) Rules, 2006  Trade Marks Act, 1999 & Trade Marks Rules 2002 Copyright Amendment Act 2012 Indian Accounting Standards AS26 – Intangible Assets- Recognition, Measurement, Amortisation & Disclosures AS14 –Valuation of Intangible Assets acquired by way of Amalgamation AS12 – Valuation of Intangible Assets acquired by way of Government Grant AS22 – Deferred Tax Assets AS19 – Accounting for Leases AS21 – Goodwill arising on consolidation RRR Chambers - [email protected]

7. LEGAL PROVISIONS RELATING TO INTANGIBLE ASSETS –international Legal provisions – International WIPO – World Intellectual Property Rights Organization The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) THE PATENT COOPERATION TREATY International Financial Reporting Standards(IFRS) IAS38 – Intangible Assets IAS13 – Fair value Measurement IAS 36 – Impairment of Assets IFRS 3 – Business Combinations RRR Chambers - [email protected]

8. LEGAL PROVISIONS . Legal provisions – International International Financial Reporting Standards(IFRS) IAS38 – Intangible Assets IAS13 – Fair value Measurement IAS 36 – Impairment of Assets IFRS 3 – Business Combinations WIPO – World Intellectual Property Rights Organization The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) THE PATENT COOPERATION TREATY RRR Chambers - [email protected]

9. Disclosures as per accounting standards- AS26 Disclosures under Indian accounting standard AS26 Useful life of the asset, limited to a maximum of 10 years Amortisation method and period of amortisation Original value and value after amortisation Gross carrying amount, reconciliation of amount at the end of the period Impairment losses recognised in the P&L account Any change in amortisation method or residual value Different classes of assets to be disclosed separately RRR Chambers - [email protected]

10. Disclosures as per ifrs-ias38 Disclosures under IFRS – IAS38 Different classes of intangible assets Distinguish between internally generated and other intangible assets Useful life Amortisation method Gross and net carrying amounts Additions and deletions Increases or decreases due to impairment recognised in the other comprehensive income Impairment losses RRR Chambers - [email protected]

11. What is INTELLECTUAL PROPERTY? RRR Chambers - [email protected]

12. RRR Chambers - [email protected]

13. INTELLECTUAL PROPERTY Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.  It includes Trademarks, Copyrights, Patents, Industrial Designs and in some jurisdictions Trade Secrets. RRR Chambers - [email protected]

14. WHAT IS INTELLECTUAL PROPERTY? Patents Trademarks Copyrights Trade secrets RRR Chambers - [email protected]

15. Designs TRADEMARK DESIGNS PATENT TRADE SECRETS COPYRIGHT

16. What is a trademark? RRR Chambers - [email protected]

17. What is a copyright? RRR Chambers - [email protected]

18. RRR Chambers - [email protected]

19. What is a patent? RRR Chambers - [email protected]

20. RRR Chambers - [email protected]

21. WHERE IS YOUR IP? Registrars’ files Curatorial files Retail Publications Marketing Legal Director’s office Contracts dept. Photography Archives Film/Video Information Technology Exhibition Education RRR Chambers - [email protected]

22. MEANING OF ASSET An economic resource. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset. An item of economic value owned by an enterprise that could be converted into cash “An asset is a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise” RRR Chambers - [email protected]

23. TWO KINDS OF ASSETS RRR Chambers - [email protected]

24. IP ASSETS Intangible asset – knowledge based Legal Right to exclude others from using Limited duration Assignable/ Licensable/Transferable Can be bought, sold, licensed, or given away free Multi-usable Use does not exhaust RRR Chambers - [email protected]

25. 26 Legal and Business Intangible RRR Chambers - [email protected]

26. FACTORS DRIVING THE INTELLECTUAL PROPERTY Intellectual property derives its value from a wide range of significant parameters such as RRR Chambers - [email protected]

27. Legal provisions – International International Financial Reporting Standards(IFRS) International Financial Reporting Standards (IFRS) is a set of accounting standards developed by an independent, not-for-profit organization called the International Accounting Standards Board (IASB) WIPO – World Intellectual Property Rights Organization The World Intellectual Property Organization is one of the 17 specialized agencies of the United Nations. WIPO was created in 1967 "to encourage creative activity, to promote the protection of intellectual property throughout the world" The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an international legal agreement between all the member nations of the World Trade Organization (WTO) THE PATENT COOPERATION TREATY The Patent Cooperation Treaty (PCT) is an international patent law treaty, concluded in 1970. It provides a unified procedure for filing patent applications to protect inventions in each of its contracting states. A patent application filed under the PCT is called an international application, or PCT application LEGAL PROVISIONS . RRR Chambers - [email protected]

28. RISKS IN IP ASSETS RRR Chambers - [email protected]

29. Managing Your Intellectual Property Assets Analyze legal status of rights ( e.g.PD ) Register copyrights, trademarks, & domains Track renewal dates Track status and ownership Track license restrictions Ensure proper © and ® Develop technical requirements Invest in software and/or Intranet RRR Chambers - [email protected]

30. Intellectual Property Management RRR Chambers - [email protected]

31. Registration Intellectual Property Controlled By Trademarks & Patents Controller General of Patents Designs and Trademarks, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry. Copyrights Copyright Office, Copyright Societies, Government of India RRR Chambers - [email protected]

32. Trademark - Examples A name (including personal or surname of the applicant or predecessor in business or the signature of the person) A coined word or an invented word or any arbitrary dictionary word or words, not being directly descriptive of the character or quality of the goods / service alphanumeric or Letters or numerals or any combination thereof. Logo, Image, symbol, monograms, 3 dimensional shapes, letters etc. Sound marks in audio format  RRR Chambers - [email protected]

33. Procedure for registration Trademark search Search whether similar to already registered trademark Create trademark application If search reveals no similar trademark already registered – prepare the Trade Mark application Trademark registration The Trade marks office will first check your application to see if it's already been taken. If it has, a trademark objection will be raised. If it has no objection, it makes an advertisement in the Trade Marks Journal. If there is no opposition from other businesses in the next four months, your trademark is registered around six months later Fees for trademark registration Rs. 4500/- per class for SME RRR Chambers - [email protected]

34. Documents required  Documents required for filing a Trade Mark Application Trademark or logo copy Applicant details like name, address and nationality and for company: the state of incorporation Goods or services to register Date of first use of the trademark in India, if used by you prior to applying. Power of attorney to be signed by the applicant RRR Chambers - [email protected]

35. Why Trademark Registration Even biggest businesses like coca-cola, Siemens, Apple protect their business by means of trademark. The trademark would be important asset for your business and contributes to the goodwill generated. With registered trademark you can stop others from using your trademarked business name / logo etc with regards to goods or services it is registered Trademark can considered just like any other form of asset like real estate, as it can be sold, licensed or assigned It guarantees the identity of the origin of goods and services. It stimulates further purchase. It serves as a badge of loyalty and affiliation. It may enable consumer to make a life style or fashion statement. RRR Chambers - [email protected]

36. Patent Registration Define the invention (idea or concept) with as much details as possible Collect all the information about your invention such as: Area of invention Description of the invention what it does How does it work Advantages of the invention include drawings, diagrams or sketches explaining working of invention Check whether the invention is patentable subject matter Confirm Eligibility Novelty, Non-obvious, Industrial application & Enabling RRR Chambers - [email protected]

37. Eligibility for Patent Novelty  means the information you have written in the specification of your patent application (subject matter) is not published or know to or available to public in India or elsewhere before the date of filing of the patent. An inventive step:  a subject matter in patent application having inventive step means, the invention disclosed is not obvious to a person skilled in the art. Especially with reference to the prior art or the information already know or available to the public. In other words, the invention should not be obvious to people who are from the same field of invention.    In other words, the inventive step means an aspect of the invention that involves a  Technical advance  or  economic significance   or b oth with respect to existing knowledge, thus making invention non obvious to a person skilled in the art. Industrial application:  as the name suggest, invention to be patented should have a utility that is it is capable of being made and used in an industry. Enabling:  This criterion suggests that the information disclosed in the proposed invention should be sufficient to reduce it in to practice. And this information must be included in to the patent application for the invention. RRR Chambers - [email protected]

38. Patent Registration Procedure Submit application Publication of application Request for examination Respond to objections, if any Clear all objections RRR Chambers - [email protected]

39. Subject Matter Not Patentable Inventions related to atomic energy abstract ideas laws of nature or anything contrary to well established natural laws physical phenomenon discovery of any living thing or non living substance method of agriculture or horticulture new form of know substances method of playing games any aesthetic creations anything that causes a serious harm to human animal, plant life  RRR Chambers - [email protected]

40. Effects of management of IP assets IP assets, when properly managed, can: motivate and help generate revenues from product sales and licensing royalties; increase high value exports; attract high-value foreign direct investment (FDI) and joint ventures; help retain and motivate technical personnel; stimulate research and development (R&D) based industries; create employment; support educational and research institutions; enhance corporate valuation; promote funding for R&D, which provides and enhances needed technologies and products; provide bargaining power in technology transfer negotiations; help to gain access to goods and technologies through licensing agreements. RRR Chambers - [email protected]

41. VALUATION OF INTELLECTUAL PROPERTIES RRR Chambers - [email protected]

42. Valuation? Easier said than done! Valuation of Intangible Assets??? RRR Chambers - [email protected]

43. Valuation Valuation is a process of determining value or worth of an asset Valuation often combines objective and subjective considerations WHAT ARE YOUR IP ASSETS WORTH? TO WHOM ARE THEY VALUABLE? IS THE VALUE FINANCIAL? ARE THEY MEASURABLE INDEPENDENTLY OR ONLY AS PART OF A COLLECTIVE WORK? ( e.g a database) RRR Chambers - [email protected]

44. IP Valuation IP valuation dependent on various factors like- Use of the IP assets Market share of company Openness of economy Legal protection of IP Enforcement cost Economic growth Profile of economy RRR Chambers - [email protected]

45. When is IP Valuation Used ? Litigation IP audit (management tool) Licensing Joint ventures (collaborations) Merger and acquisition Financial reporting Financing Investment transactions RRR Chambers - [email protected]

46. Use of IP Valuation 1 For commercial transactions For pricing product For evaluating potential merger or acquisition candidates For identifying and prioritizing assets that drive value For strengthening positions in technology transfer negotiations For making informed financial decisions on IP maintenance, commercialization and donation RRR Chambers - [email protected]

47. Use of IP Valuation 2 For evaluating the commercial prospects for early stage Research & Development (R&D) For evaluating R&D efforts and prioritizing research projects For Financing securitisation For litigation For tax planning RRR Chambers - [email protected]

48. IP Valuation in R&D Environment Tool in a decision making process – provides management with useful information as a base for decisions in pre commercial and commercialization phase; Important part of the technology transfer processes – collaborations, sponsorships, licensing, establishing of the start – ups, etc; Enables fund raising; Communication tool – about the value of technologies developed by R&D, and products based on them; Supports learning process – how to add value to the organizational processes, human capital, research results, IP etc; Monitoring on return on investment; Litigation – rare situation for publically funded research institutions. RRR Chambers - [email protected]

49. Benefits of IP Valuation Can give a better idea of the overall value of the business Can provide a tool to measure and manage the assets Can provide security and backing for lenders Can provide taxation benefits (taxation deductions) Can reduce the proportion of business’ net worth attributed to goodwill – important when selling a business RRR Chambers - [email protected]

50. VALUATION OF INTANGIBLE ASSETS Business enterprises acquire intangible assets By Internal generation By Research & Development By Purchase Through merger with another entity Through licence or franchise By Goodwill Recognition criteria The asset is Identifiable The enterprise controls the intangible asset Future Economic Benefits will flow to the enterprise RRR Chambers - [email protected]

51. VALUATION OF INTANGIBLE ASSETS…. Methods of Valuation Methods of valuation General Approach Modern Approach General Approach Methods Historical cost or acquisition cost method Fair value method Modern Approach Income method Market Value method Relief from Royalty method Technology Factor method Direct Intellectual Capital Method Market Capitalization Method Return on Assets Method Score cards Method RRR Chambers - [email protected]

52. Which method to choose? Sl.No . Valuation Method Risk/Disadvantages Usage 1 Income Method Accurate projection of future income streams, Discount rate used Used where income streams are easily identified 2 Market Value method Intangible assets are not frequently traded. Difficult to get details on transactions. Used where comparable market transactions are available 3 Cost Approach Does not recognise any economic benefits associated with market place activity. Used mostly for accounting purpose 4 Relief from Royalty method Finding appropriate Royalty Rate Used where Income streams can be identified and rate of royalty is available 5 Technology Factor Approach Depends on appropriate selection of attributes and weightage. Highly subjective. Used where unique technology is involved 6 Return on Assets method Cost based Used where there is huge capital expenditure is required 7 Direct Intellectual Capital method Historical Cost based. Sometimes it may not be possible to segregate the cost attributable to a particular intangible asset. Used mostly with technical knowhow, Research and Development 8 Score Card Method Identification of appropriate components is critical for the success of this method. Used where non-financial parameters are more significant RRR Chambers - [email protected]

53. Income Approach Cost Approach Market Approach Valuation Techniques Most recent comparable transactions / Multiples Current price on active market Relief from Royalty Method Excess Earnings Method Incremental Cash Flow Method Reproduction Cost Method Replacement Cost Method IP Valuation Techniques RRR Chambers - [email protected]

54. Key Considerations in Valuation Ensure correct definition of assets and who owns them In valuing the IP, identify/carve-out the cash flows that it generates Select an appropriate valuation methodology and cross-check against other approaches Depending on the purpose of the valuation, it may be important to seek expert legal advice, particularly if it relates to a transaction or dispute Valuation of IP is a subjective area involving a high degree of technical complexity Where there is a lot at stake, it is advisable to seek expert assistance In most cases, IP valuations will be challenged and consequently the experience and credibility of the valuer is of paramount importance RRR Chambers - [email protected]

55. Determinants of Value Benefit Stream – Cash flows over the next so many years – how much? Time period – how long? Risk – how stable/variable are the above two factors? Brand Equity Metrics Relative Perceived quality /Loyalty/retention Total number of customers/Consumer satisfaction Awareness /Perceived quality/esteem Market share (volume or value) Complaints (dissatisfaction level) Distribution/availability What adds value to a Brand? Sustaining value by delivering what the brand promises Emotional touch by the brand IP Valuation Dynamics RRR Chambers - [email protected]

56. IP Valuation Methodologies Transactional/Market Approach Cost Approach Income Approach RRR Chambers - [email protected]

57. Transactional Method Sales comparison approach It is based on actual price paid for a similar or comparable IP under similar/comparable circumstances Need complete data Problem in getting full details Two steps: screening and adjustments Screening is identifying third party transactions Adjustments are in Location, Advertising support, IP strength and period of licence RRR Chambers - [email protected]

58. Discounted Cash Flow (DCF) Method Attempts to determine the value of the IP by computing the present value of cash flows, attributable to that piece of IP, over the useful life of the asset. Does not capture the unique independent risks associated with patents. All risks are lumped together and are assumed to be appropriately adjusted for in the discount rate and the probability of success, rather than being broken out and dealt with individually (i.e., such as legal risk, technological risk, piracy, etc.) Further, often DCF fails to consider dependencies on properties held by others. In roughly 40 percent of cases, patents depend on other patents or property held in the public domain RRR Chambers - [email protected]

59. Cost Method Estimates the value of underlying IP asset basing on historical cost incurred in developing the asset Two approaches Replacement Cost: The cost to develop similar functionality to the subject IP outside the scope of the legal protection Reproduction cost : Cost of reproducing the IP product or service or procedure RRR Chambers - [email protected]

60. Cost Approach: When? Has limited value Used for Patents Software Designs When Asset is newly created with limited protection Commercially untested Where reproduction cost best estimate of value Buyer unwilling to pay more than cost to recreate or engineer around protected design RRR Chambers - [email protected]

61. Cost Approach: Factors? Components of Cost Value Assessment Materials Labor Overhead Developer’s/entrepreneur’s profit Taxes RRR Chambers - [email protected]

62. Calculating Net Value Net present value Calculating the future value of intellectual asset (investment) at present time NPV= A(1 + r)-n i.e. NPV = A[1/(1 + r)n] where: NPV= net present value (i.e. DCF); A= amount expected at year n; r = risk factor RRR Chambers - [email protected]

63. 1. Factors Considered in Patent Valuation Qualitative and quantitative characteristics of the patent(s), including the specific patent claim Earnings capacity and profitability relating to the patent(s) The impact of known blocking patents Any current or previous licensing of the patent Legal rights and restrictions to the patent(s), including foreign patent protection RRR Chambers - [email protected]

64. 1. Factors Considered in Patent Valuation Contracts associated with the patent(s) Competition, barriers to entry and risks associated with the patent(s) Product life cycles and positioning Historical growth and prospects for the future Alternative uses for the patent(s) RRR Chambers - [email protected]

65. 2. Factors Considered in Trade Mark Valuation Qualitative and quantitative characteristics of the trademark(s) Earnings capacity and profitability relating to the trademark(s) Market share supported by, or as a result of the trademark(s) Market recognition analysis of the trademark(s) Legal rights and restrictions to the trademark(s) Contracts associated with the trademark(s) RRR Chambers - [email protected]

66. 2. Factors Considered in Trade Mark Valuation Competition, barriers to entry and risks associated with the trademark(s) Product life cycles and positioning Historical growth and prospects for the future Exploitation opportunities of the trademark(s) into new markets/products RRR Chambers - [email protected]

67. 3. Factors Considered in Brand Valuation Qualitative and quantitative characteristics of the brand name(s) Earnings capacity and profitability relating to the brand name(s) Market share supported by, or as a result of the brand name(s) Market recognition analysis of the brand name(s) Legal rights and restrictions to the brand name(s) RRR Chambers - [email protected]

68. 3. Factors Considered in Brand Valuation Contracts associated with the brand name(s) Competition, barriers to entry and risks associated with the brand name(s) Product life cycles and positioning Historical growth and prospects for the future Exploitation opportunities of the brand name(s) into new markets/products RRR Chambers - [email protected]

69. Income Method Intrinsic value Ability to generate cash flow Income Approach: Based on the income-producing capability of underlying IP asset Seeks to establish the net present value (hence use of discounted cash flow [DCF]) Decision tree analysis (DTA)-based on an underlying DCF analysis and moves further to take into consideration flexibility available. RRR Chambers - [email protected]

70. Income Approach PV = I 1 (1+r) -1 + I 2 (1+r) -2 + I 3 (1+r) -3 ….+ I n (1+r) -n Where PV = Present value of IP asset I = Economic income projection r = Discount rate n = Year RRR Chambers - [email protected]

71. Variables in Income Approach An income stream either from product sales or licensure of the patent An estimate of the duration of the patent’s useful life An understanding of patent specific risk factors and incorporating those into the valuation A discount rate RRR Chambers - [email protected]

72. INCOME METHOD VALUATION Annual cash flow expected 10.0 Cr. Useful life 8 years Discount rate 11% Present value 34.7 Cr Income method of valuation -discounted cash flow from an intangible asset INCOME METHOD The value of the intangible asset is taken as 34.7 cr. RRR Chambers - [email protected]

73. RRR Chambers - [email protected]

74. Excess Earnings Method RRR Chambers - [email protected]

75. Return on Assets Method Under this method ROA is calculated by dividing average pre-tax earnings of a company by average tangible assets of the company. The above ROA is compared with industry average. The difference between the industry average ROA and the Company’s ROA is multiplied by average tangible assets is taken as the average earnings from the intangible assets. This divided by average cost of capital of the company gives the value of the intellectual capital. ROA = Average pre-tax earnings / average tangible assets. Return on Assets Method Average pretax earnings 50 lakhs Tangible Assets 250 lakhs Return on Assets (ROA) of the entity 20% Industry average ROA 15% Excess return 5% Earnings from Intangible Assets 5% X 250 = 12.5 Average cost of capital 14% Value of intangible assets 12.5/14%= 89.3 lakhs RRR Chambers - [email protected]

76. Market Approach When Focus is on market transactions – sales/licenses IP transaction details highly confidential Assets typically not comparable Different underlying IP assets Different compensation structures Different geographic territories Different market potentials/degree of success RRR Chambers - [email protected]

77. Disclose properly or regret? Significance of Disclosure RRR Chambers - [email protected]

78. Whether Intangible Asset is a new source of funding??? RRR Chambers - [email protected]

79. Sources of Funding RRR Chambers - [email protected]

80. 81 Intangible as a Rising Source of raising fund RRR Chambers - [email protected]

81. 82 Financial Institutions and Intangible assets Commercial intangible assets that are common to the banking and thrift industries RRR Chambers - [email protected]

82. Why Valuation? In Mergers and Amalgamations Business Acquisitions Fund Raising In making strategic alliances, Joint ventures For knowledge of investors/financiers Financial Reporting purpose Licensing Liquidation RRR Chambers - [email protected]

83. Market Capitalisation & Brand Value Company Name % of Brand Contribution to Market Capitalisation Coca Cola 45% Disney 65% Mercedes Benz 40% IBM 37% Intel 30% RRR Chambers - [email protected]

84. Famous Brand Acquisitions Sun Pharma to acquire branded oncology product Odomzo ® from Novartis upfront payment of USD 175 million (2016) Facebook acquired WhatsApp $19 billion (2014) Facebook acquired Instagram for $1 billion (2012) Google acquired YouTube for$1.65 billion in 2006 Amazon to Acquire Whole Foods grocery chain for $13.7 Billion (2017) Flipkart owned Myntra acquires Jabong for $70mn (2016) Flipkart offers $1 billion for Snapdeal (2017) Sun Pharma acquired Israeli company Taro for $454 million 92010) Cipla, two US-based generic companies  InvaGen  and  Exelan , worth $550 million (2016) Godrej acquired Genteel(liquid detergent) and Swastik ( Shikakai and Neem soap) brands (2010) RRR Chambers - [email protected]

85. 86 Case Study With the loans to Kingfisher Airlines ( KFA) turning into a non-performing asset (NPA), the Reserve Bank of India (RBI) has asked banks not to treat “Kingfisher brand”, an intangible asset, as collateral RBI’s instruction to banks is the principle of lending to and on the back of all intangible and knowledge assets. By permitting banks to finance investments in an intangible asset such as spectrum and seeking bank’s recourse to it in the event of a default, RBI had moved forward on intangible asset financing. RRR Chambers - [email protected]

86. 87 Case Study Statement of Operations Year ended 2013 Year ended 2012 Revenue 10.2 million 3.8 million Total cost and expenses 148.7 million 59 million Net Loss 138 million 54.7 million Lack  of Recognition of Technology Factor Approach Technology Factor approach is useful only where there is an underlying technology. Accounting standards do not recognize this method. For e.g , One of biggest technology deals for 2014 was the Facebook acquisition of WhatsApp for $19 billion . WhatsApp Revenues:  It can be seen that WhatsApp’s total losses were close to $138 million in 2013 alone , against a revenue of $10.2 million . This is much more than the $3.8 million revenue in 2012 , but the losses in 2012 for WhatsApp stood at $54.7 million , which means that in 2013 the messenger’s losses were more than double. Given that WhatsApp is essentially a free service with no ads, the source of revenue was never really there. However, Facebook is a social media company and getting WhatsApp is a way to ensure that the company has key products in the three most important spaces in mobile which are: Social media, photographs (Instagram) and social messaging via WhatsApp.

87. 88 Case Study Cost of an intangible asset is bound to change over a period of time. Also, it does not take into account change in economic factors, market factors and other external factors. which may affect the value. For example, recently Volkswagen brand value was adversely affected due to emission issues of its cars. Similarly, the brand value of  Samsung took a beating when one of its mobile phone model Galaxy 7 caught fire in a flight. RRR Chambers - [email protected]

88. Commitment – a measure of the Corporate’s commitment to or belief in its brand Protection – examines how secure a brand is across a number of dimensions Clarity – the brand’s values, positioning and proposition must be clearly articulated Responsiveness – looks at a brand’s ability to adapt to market changes, challenges and opportunities. Authenticity – does the brand have a defined heritage & a well-grounded value set. Relevance – estimates how well a brand fits with customer needs, desires and decision criteria Customer understanding – of the brand and the associated enterprise Consistency – fail-free experience across all touch-points and formats. Presence – the degree to which the omnipresence of the brand is felt Differentiation – the degree to which customers perceive the brand to have a positioning that is distinct from the competition 10 Principles of Strong Brands RRR Chambers - [email protected]

89. Brand Values - India RRR Chambers - [email protected]

90. Brand Values - Global RRR Chambers - [email protected]

91. As stated above It is very important and significant for the Companies and other entities to have the valuation of their intangible assets in order to know the true value of their business And have the valuation balance sheet. It also ensure accounting, tax and regulatory compliance vis-à-vis intangible Assets Conclusion RRR Chambers - [email protected]

92. RRR Chambers - [email protected]