A design patent – or registered design – protects the general appearance and design of a product. This includes lines, contours, colours, shape, texture, materials… The design can also protect models or patterns, in textile and clothing industry for example.
In Europe, the registered design must be innovative and unique. However, unlike a patent, an design registration is not examined by a trusted third party. Without an examination and starting from a protection that does not cover the functionalities of a creation, the value of a design is often lower than that of a patent.
However, in some industries that do not easily allow patent filing, design rights can dominate, along with trademarks. They therefore deserve to be considered for their value!
How is a design evaluated?
There is no established standard directly applicable to this subject. Hence, valuation professionals adapt current standards and best practices related to patents’ or trademarks’ valuation .
Like other IP rights, analysing their legal force is necessary, as well as the market concerned, the product’s positioning on this market and the operating business model. In this particular case, the legal force is particularly difficult to assess because a design registration facilitates certain legal actions, but does not in itself guarantee the originality of the creation and even less the success of any legal claim against possible infringers. It is therefore the analysis of the creation, the legal history and the creation use that will make it possible to appreciate, as accurately as possible, the strength of those IP rights.
The value is then based on the use of the creation: the business model, the trading area (possibly different from the protection area), the customers, etc. Other intangible assets can also “parasitize” the valuation, such as brands, patents, know-how… We need then to separate the most valuable assets from those used for consolidating rights rather than for intrinsic product valuation. It is necessary to assess the design’s contribution to the product’s operating. Indeed, is it design that explains the success of a product or rather the brand’s notoriety? The distribution network? Product features?
This is therefore where the greatest difficulty lies in intangible assets’ valuation, in addition to the financial valuation methods and parameters to be considered.
With regard to methods, the preferred method is generally the one based on expected future earnings: the discounted cash flow or net present value method. However, other methods are applicable, based on costs or on comparables. The latter is often difficult to implement due to a lack of sufficient and relevant information.
With IP’Nuts, you can get a value estimate of your design, using the discounted future cash flow method. We have developed an algorithm that allows us to process your data more quickly so that we can then define the appropriate evaluation parameters and send you a value estimate within 3 working days, based on the self-reported information you have submitted to us.
This service allows you to quickly obtain an answer when you are in the middle of commercial negotiations, assignment of your rights, or in the event of a dispute related to these rights.
Yet for any in-depth evaluation carried out by an independent third party, you can contact us directly so that we can provide you with a personalised quote.