Economic Valuation of Patents and Trade Marks, and the Patent Box
Economic Valuation of Patents and Trade Marks
Patents, trade marks, designs (ornamental models), and in general all industrial property titles are entered on company balance sheets as intangible assets, and as such should be valued financially based on their value. Industrial property titles are integrated into corporate strategy to expand economic, commercial, and financial exchange opportunities, and not only to combat counterfeiting. Increasingly, the most substantial intellectual property portfolios serve as collateral for loans extended by financial institutions.
Our firm relies on the collaboration of professionals with expertise in IP portfolio valuation for balance sheet revaluations, obtaining financing from financial institutions or private investors, damages from infringers, and/or for negotiating agreements with potential technical/commercial partners.
Industrial Property Portfolio
A portfolio of industrial property titles is certainly an excellent "bargaining chip" when negotiating:
- licence agreements,
- agreements on the assignment and/or acquisition of industrial property rights;
- franchising, merchandising, co-branding, distribution agreements;
- agreements on the joint technical development of new products/processes;
- bank mortgages and loans.
The patent portfolio must be entered on the balance sheet among the company's intangible assets and may constitute collateral in the shareholder agreements signed by the members of a company.
Even today, many Italian companies perceive industrial property as a mere cost, and as such not always manageable, especially for medium or small enterprises. Abroad, and especially in the English-speaking world, industrial property is perceived as a strategic function for gaining competitive advantages and aggressively pursuing markets, and is recognised as a valuable asset by third-party operators such as banks and investment funds.
The Italian banking system is also opening up to the world of intellectual property titles, entered on company balance sheets as intangible assets, attributing financial value within the overall company valuation exercise.
From late 2008, the Italian Patent and Trade Mark Office (UIBM), Confindustria, universities (CRUI), and the Italian Banking Association (ABI) launched a round table to develop a methodology, as widely shared as possible, for the financial valuation of companies' patent, trade mark, and design portfolios. The methodology developed by that working group was used by the Ministry of Economic Development to define the criteria for granting innovation incentives within the "Industria 2015" industrial policy programme, with the aim of supporting companies, especially medium and small ones, in developing projects protected by trade marks, patents, and designs. The BREVETTI+, DESIGN+, and MARCHI+ schemes established in 2011 by the Ministry, and the new FONDO PER L'INNOVAZIONE, are largely the result of this new approach.
The Patent Box is an Italian tax incentive scheme that allows companies to increase by 110% the costs incurred for research and development of intangible assets, such as patents, protected software, designs and models. This super-deduction allows a tax saving, reducing taxes (IRES/IRAP) and promoting technological innovation.
Main features and operation:
Beneficiaries: business income taxpayers (companies of any size and sector) that invest in maintaining and developing intangible assets.
Incentive: 110% uplift of eligible research and development (R&D) costs.
Qualifying assets: copyright-protected software, industrial patents, legally protected designs and models.
Duration: the option is irrevocable, lasts 5 tax periods, and is renewable.
Eligible costs: personnel, depreciation, consultancy, materials, and supplies related to the assets.
In the context of a market that increasingly values innovation and know-how, the Patent Box is an important strategic tool for Italian companies. This measure aims to support companies that invest in intangible assets, offering them a series of tax benefits that reward ingenuity and the capacity to innovate.
BIESSE's professionals are able to assist clients and their advisers with all Patent Box related matters, as well as with incentive schemes and funding applications.
