Royalty stacking

“Royalty stacking” results from an incorrect application of “the 25% Rule”. The best way of explaining this concept is by way of example: Opco uses trademarks, patents, designs, copyright and know-how in its business. Opco wishes sequentially to assign each …

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Valuation of nascent technology

Nascent technology is typically valued using the cost approach. However, where the nascent technology is patentable, the cost approach does not account for value subsisting in the “monopoly rights”, and consequently grossly undervalues the intellectual property (IP). One must therefore …

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Royalty benchmarking reports

The most appropriate methodology for determining a reasonable royalty rate is that which leaves the least number of questions unanswered. Unfortunately, databases such as royaltsource.com give insufficient information about the licensee to pass a thorough inquiry wholly intact. For example: …

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Use of the 25% Rule

Nearly all intellectual property (IP) valuations prepared in South Africa for tax purposes use the relief from royalty methodology and “the 25% rule” for calculating the royalty. According to “the 25% rule”, the royalty rate is generally expected to fall …

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IP valuation: importance of being earnest

How often has your reaction to an IP valuation been “Wow, that’s high!” Then it is not surprising that this is also SARS’ standard reaction to IP valuations. Where IP valuations are prepared as part of a tax or structured …

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