This year marks the 10-year anniversary of your firm. What are some of IPMAP’s proudest achievements since its inception, and what steps are you taking to future-proof the organisation?

Several weeks after I launched IPMAP in May 2014, we realised that the tremendous effects of events such as inter partes reviews at the PTAB and the US Supreme Court ruling in Alice v CLS were either underestimated or completely unexpected by our team, which left us with no other option but to substantially change our business plan. Looking back, we are very proud that not only did the then-nascent IPMAP survive all of the shocks in the market, but it also expanded and became a major player in IP damage, expert witness and valuation services. I am extremely grateful to all of the mentors, clients and friends who trusted and supported us during those years, including the late professor Steve Magee, my academic mentor and our testifying damage expert, and my mentor and friend Erich Spangenberg.

Right before the pandemic, we started to diversify our business practices into areas such as advising and brokering customised private deals in patent transactions and underwriting litigation financing. Today, IPMAP offers a full spectrum of services from IP valuation for business operations including corporate transactions, investment and financial reporting to IP transactions, pre-litigation negotiation and litigation financing and damage-expert testimonies. We are starting the next 10 years off on the right foot with an award from Financial Services Review as one of the top 10 valuation services providers in 2024. 

You are known as one of the best minds in the industry when it comes to valuing patents. What are the key characteristics of a strong intangible asset valuation strategy?

That would include a thorough understanding of the compounding or interactive effects of major factors, including:

• the nature of the intangible assets (eg, the technologies behind patents or trade secrets);
• the economics underlying the contribution of the assets to the value of the products or services;
• the financial performance of the business model that materialises an asset’s contribution; and 
• other major market factors, such as current market condition, the technology’s lifecycle, industry and product and competition dynamics. 

AI continues to be a hot topic in the IP world. How is AI impacting patent valuation practices, and what are the biggest threats and opportunities in this area?

I have had a chance to review various AI-based tools or platforms in the market. These have proven to be very useful in prior art search, patent evaluation and analysis, landscape analysis and management and even in drafting patents and making claim charts. However, I have not seen any impressively effective AI-based platforms for patent valuation. That being said, AI-based tools – such as those for patent evaluation or claim-chart making – will make valuation experts’ jobs much easier and more efficient.

Amid the unstandardised nature of IP valuation, do you think companies should have to disclose value of their intellectual property on the balance sheet, and why?

First of all, the methodologically unstandardised nature of IP valuation actually reflects a much more fundamental issue in the economics of intangibles, which, as Professor Baruch Lev once summarised, “intangibles, like physical and financial assets, are subject to the fundamental law of balancing benefits and costs”. According to Professor Lev, the drivers of economic benefits from intangibles are non-rivalry (or non-scarcity) and network effects, while the value detractors include partial excludability, inherent risk and non-tradability. 

In accounting and financial reporting, an asset is defined as a present right of an entity to an economic benefit. Balancing benefits and costs with regard to intangibles would put huge uncertainty on the two essential characteristics of an asset: present right and economic benefit. Additionally, this definition would also imply that an entity can restrict others’ access to the economic benefit, which may not be true for at least some, if not most, of the intangible assets.

Therefore, I think the question of whether to disclose the value of intellectual property on the balance sheet would have to be answered based on specific type of IP asset.

What is your take on the impact of AI on third-party litigation funding?

As I mentioned above, AI-based tools can be fairly effective in validity and infringement analysis. This will make the litigation-financing market more efficient by substantially shortening the time of due diligence analysis and increasing the reliability of the analysis.