Tom Brady’s Super Bowl Win Increases Value

Whether you love to hate him or you are one of his biggest fans, New England Patriots’ quarterback Tom Brady is one of NFL’s biggest superstars. At the ripe age of 39, his latest Super Bowl win makes him even more valuable. Brady’s performance earned him his fourth Super Bowl MVP award. In the span of his 17-year career, he has become the winningest quarterback of all time with the most game wins and five Super Bowl victories. It is also telling that the only Super Bowl wins for the Patriots have been with Tom Brady as quarterback.

As the winningest quarterback of all time, Tom Brady still falls behind in stats compared to other quarterbacks in regular season. However, he is close in many categories. Given that he recently announced that he doesn’t plan to retire until his mid-40s, he is likely to set more records. This gives him ample opportunity to go down in history as the greatest, undisputed quarterback to play the game.

Brady’s amazing comeback in Super Bowl LI is likely to increase demand for Patriots tickets in 2017 as fans are anxious to watch him play more. In 2016, Forbes listed the Patriots as the second most valuable team after the Cowboys. The Super Bowl LI win and the desire to see what’s next for the quarterback superstar may help the team slip to the number one spot in 2017.

In the sports world, winning is everything. Those who show exemplary talent and consistent wins are offered many opportunities on and off the field. As such, Brady’s fifth Super Bowl win puts him in high demand. While he has already made millions in endorsements for such companies as Under Armour, Ugg Boots, Sirius, Visa, Nike, and others, he is likely to receive more opportunities for endorsements. Shortly after his win, he was also approached to be the subject of a book and film.

While his career has been riddled with negative publicity including the deflated football debacle, his talents continue to rise above these incidents. He is a man who seems to have it all, including a supermodel wife, a net worth of $180 million, endorsements, and a hot career. At this rate, when he does decide to retire, he may likely fall into the footsteps of other former greats including Brett Favre and Peyton Manning. They’ve continued to enjoy endorsement opportunities and have even made guest appearances on television and in movies. It will be interesting to see what opportunities come Brady’s way. In the meantime, he will likely continue to break records and build on his legacy in the sport.

Five Tactics Lady Gaga Used at Super Bowl LI to Increase Marketability

Celebrities become famous for exceptional talent, which may include singing, acting, dancing, and others. However, keeping their value entails more than just showcasing a talent. They must also heavily market themselves. For instance, while it may take months or even years to make a movie, the movie only lasts a couple of hours. In order to maintain their value in the meantime, celebrities often use endorsements to keep their presence in the eyes of the public. They may also tease the public with their next project. In the end, it takes a lot of effort for celebrities to continue proving they are valuable to the industry and spark interest in the public.

Finding various ways to promote themselves is almost another form of talent for celebrities. The more creative they get, the more noticeable they become. Take Lady Gaga for instance. She recently performed at the Super Bowl for basically free. However, she enhanced her value with this performance in the following five ways:

1. Performed for free. While Lady Gaga didn’t make money from her Super Bowl performance, she gained incredible publicity without having to share the stage with any other performer. The Super Bowl is thought to be one of the biggest forms of promotion in the United States as it receives more than 100 million viewers. For Gaga, it paid off well as sales surged 1,000% right after her performance!

2. Kept it clean. While Lady Gaga is known for her eccentricities, she was able to wow the audience without the shock value. For instance, there were no wardrobe malfunctions, gyrating, or other inappropriate gestures. She kept her performance appropriate for a wide and very public audience. This enhances her likeability and keeps the focus on her talent.

3. Avoided political commentary. Election years and the swearing in of a new president create a host of opinions worldwide. Many times celebrities use the limelight to publicly announce their political views. This can create negative publicity and lose the respect of fans who do not hold the same views.

4. Entertained. Lady Gaga kept the audience captivated by performing acrobatics, dancing routines, singing new and popular songs, and playing instruments. Her livelihood is as an entertainer and her ability to entertain on many different levels works in her favor.

5. Announced her tour. A few hours after her halftime performance, Lady Gaga strategically announced a worldwide tour. It was the perfect opportunity to make such a big announcement after a well-received performance in front of millions of viewers.

Maintaining a positive image in the eyes of the public is paramount for success to any celebrity. With Lady Gaga’s surge in sales and announcement of a worldwide tour, it appears her marketing tactics proved successful.

Athletes Capitalize on Likeness

In the sports world, many athletes become famous for their skills. Those who perform the best and win the most games receive more notoriety. Fans become attached to these players and want to see them often. These players even draw new fans as they become more famous and continue to play well. However, athletes are generally not in a sport for a lifetime. Due to age, injury, and loss of skills over time, they eventually have to retire. Retirement generally comes earlier for athletes than for professionals from other careers. Therefore, it makes sense for athletes who have become famous for their catchphrases, names, and skills to seek trademarks so others do not capitalize on something they’ve earned themselves.

Some famous athlete trademarks include the following: Tim Tebow’s “Tebowing,” LeBron James’ “King James,” Marshawn Lynch’s “Beast Mode,” Lance Armstrong’s “Livestrong,” Jeremy Lin’s “Linsanity,” and many others. As noted, athletes can trademark catchphrases, names of particular poses, nicknames, and more. Some may use their name in original ways (e.g., Lance Armstrong for Livestrong charity that raises money for cancer). If the athletes don’t trademark these things themselves, then fans and companies may capitalize on them. There have many cases where a fan uses a catchphrase associated with an athlete and tries to sell t-shirts or other products with that catchphrase.

With trademarks, these athletes may be able to negotiate sponsorships, gain revenue, and/or raise awareness for something (such as Armstrong’s cancer charity). By trademarking their names, they can make their brand outlive their actual sports career. For instance, Michael Jordan is still keeping his brand strong years after he retired from basketball. In fact, he recently won a case for the rights to his Chinese name. Furthermore, by applying for trademarks, these athletes can prevent others from misusing their names or leading people to believe they endorse something that they don’t. They can also prevent others from generating revenue based on their likeness.

Athletes who move to trademark their names, likeness, and catchphrases early in the process have more control over the use of these trademarks. Some athletes even start the filing process while still in college. Although they cannot capitalize on those trademarks while still in college, they can prevent others from capitalizing on their likeness. Two such athletes include Dak Prescott and Ezekiel Elliott, both rookies for the NFL’s Dallas Cowboys. Both athletes applied for trademarks while still in college, which has proven to be a smart move. Prescott and Elliott have both had an extremely successful first year in the pros, earning their way into the playoffs. As a result, their catchphrases and nicknames have been displayed and used abundantly by their fans. With such a successful start, they are likely to land more sponsorships and sell more products associated with their trademarks. Since they already applied for trademarks, they can prevent others from exploiting their names and already have a head start on negotiating deals for sponsorships and products. It’s an overall smart strategy. It gives them more recognition both on and off the field, and provides them protection as well as other revenue avenues down the road.

Five Reasons to Hire an IP Valuation Firm

Intellectual property creates tremendous value for companies and individuals. The value amount varies among the different types of intellectual property. Therefore, determining the value of the entire intellectual property industry is impossible. Intellectual properties exist in several forms, including patents, trade secrets, trademarks, and copyrights, which equates to millions of assets. Without performing due diligence on each and every asset in existence, determining the value of the entire industry is unrealistic. This is because the purpose of the assets, the benefits they bring to consumers/companies, the type of assets, and many other reasons determine value. For instance, a trademark for a soft drink may not command near the value applied to a car that it does for fruit-flavored, sugar-sweetened water. To use a soft drink brand transaction as a basis for establishing the value of a car’s brand is not appropriate either–the two are altogether different in their application and industry.

While determining the value of the entire intellectual property industry is unrealistic, determining the value of individual assets and/or portfolios is paramount. Companies seek IP valuations for a variety of reasons. The following identifies five reasons to seek IP valuation services.

1. Capital formation. Many businesses or individuals seek to raise capital in order to develop an idea, start a business, or to get an invention to market. Capital formation is an especially important step for startups. However, in order to get investors to invest in a particular idea or business, IP asset owners must provide an idea of what their assets are worth. Otherwise, investors won’t invest in something for which the value is not known. It is too risky.

2. Bankruptcy. Just because a company goes bankrupt doesn’t mean that its assets are no longer valuable. By obtaining an IP valuation, a company can determine whether to sell assets to pay creditors or how to properly divide its assets among parties.

3. Expert Witness Testimony. IP valuations provide strong evidence in the court of law. IP valuation analysts spend considerable time reviewing and understanding the assets under consideration. They have to in order to provide a credible valuation. Therefore, hiring an IP valuation analyst can help provide strong evidence in the court of law.

4. Litigation consulting. Law firms hire IP valuation analysts to assist them in determining the worth of assets. Lawyers, plaintiffs, and defendants alike use valuations to give an accurate, unbiased view to present to the court system.

5. Tax valuation. Tax disputes arise often when parties disagree on an asset’s worth. IP valuation analysts provide an unbiased view that can help settle such disputes. IP valuations are also ideal for moving assets that could have tax implications.

As you can see, there are strong reasons to seek an IP valuation firm. At Pellegrino & Associates, we have conducted IP valuations for all of these reasons and more. To learn more about how we can help, contact us today!

Royalty Rate Determination Process

Intellectual property (IP) licensing is big business. So big that it has become a $40 billion industry, according to IBISWorld. IP licensing affords IP owners a way of making revenue while maintaining rights to the IP. It allows them to offer their IP under negotiation to other businesses who want to use an invention that they didn’t create themselves. Therefore, in exchange for a fee, such as a royalty rate, the businesses can remain competitive.

However, determining royalty rates can be a challenging task. The following outlines the four-step process in determining royalty rates.

1. Identify key IP rights. IP valuation analysts determine the key rights that are subject to the royalty rate analysis. Therefore, the analysts seek to understand all fields of use, geographic restrictions, exclusivity restrictions, and others.

2. Identify value proposition of IP rights. The analysts determine the actual micro-economic value proposition associated with the rights afforded by the license grant. This entails quantifying the economic impacts of the IP rights.

3. Identify contributions of licensor and licensee. IP valuation analysts determine how each party contributes to the value of an IP. While the licensor naturally owns the IP rights, a licensee also brings value to the table through sales and distribution, manufacturing capability, and others. In order to apportion the contributions in an equitable manner, the analysts must identify what both parties bring to the transaction.

4. Apportion value based on licensor and licensee. The final, and easiest step, is to apportion the value. However, the analysts cannot perform this step without following the three previous steps. Without the other steps, the analysts would not have all of the details necessary to provide a reasonable royalty rate determination.

As shown, the royalty rate determination process takes four steps, but these steps require serious insight. At Pellegrino & Associates, we have years of experience determining royalty rates. Contact us today for more information!

Top Five Sports Team Brands

Recognizable and popular brands bring tremendous value to a company. Consumers gravitate to well-known brands because they feel that the products provided by those brands are trustworthy. After all, they wouldn’t be popular if they weren’t, right? At least that is the logic that many consumers have regarding brands. As consumers, we often choose our groceries and fast food items based on the brand name. For instance, if we want a cheeseburger, we know numerous available fast food restaurants that serve cheeseburgers (e.g., McDonald’s, Burger King, Wendy’s, and others). We also know the different taste, size, and cost of those cheeseburgers. We have become familiar with the brands and often base our purchasing choices on the products we know those brands offer.

While recognizable brands often include the food we eat, brands exist for a variety of other purposes. One of those is entertainment in the sports world.

Sports teams rely heavily on their brand in order to entice fans to attend games and purchase memorabilia. Heavily advertised brands are likely to do better than those less advertised. Providing a plethora of memorabilia (such as clothing, cups, key chains, and more) with recognized logos and brand names also helps raise brand value. The more recognizable a brand name, the more a team can charge for tickets and products. Winning teams also raise the bar for brand recognition, which increases the value of the brand.

According to Forbes, the top five most valuable sports team brands in 2015 were as follows:

  1. New York Yankees with a $661 million brand value.
  2. Los Angeles Lakers with a $521 million brand value.
  3. Dallas Cowboys with a $497 million brand value.
  4. New England Patriots with a $465 million brand value.
  5. Real Madrid with a $464 million brand value.

These numbers identify value based on brand, not necessarily the worth of the brand or the team in general. This means that the brand name alone can provide much value in generating revenue and recognition for a team. Therefore, the more visible the brand, the more valuable it becomes. As you can see, the most popular sports team brands range in sport type – baseball, basketball, and football.

 

Factors That Define Patent Quality

Determining the quality of patents can be a cumbersome task as many factors influence their quality. While patent quality is subjective, it is an important measure in the valuation process. In order to deliver proper patent valuations, an IP analyst must understand the true qualitative aspects of patents.

Factors that influence patent quality are numerous, with various influences including patent strength, breadth, and interest. The following are just a few examples of factors that IP analysts must consider when determining patent quality for a proper patent valuation.

  • Patent prosecution by attorney or agent. An attorney or agent may better understand how to construct claims that will withstand litigation in comparison to an inventor who constructs claims.
  • Number of dependent and independent claims. Patents with a high number of both claims describe more potential inventions and variations.
  • Patent prosecution process. Patents that undergo numerous office actions and claim rejections forces the applicant to refine the patents. The more refined the patents, the less likely they are to face post-grant validity challenges. Therefore, the more exhaustive the patent prosecution process, the higher the quality of the patents.
  • Patent assignments. Arm’s length patent transfers indicate that patents may have quality. Many times patent owners transfer patents among various entities of interest or among entities that they may own. However, when patent transfers occur between patent owners and entities in which the patent owners do no have a vested interested, then the entities’ interest in the patents implies that the patents have some value, which may indicate patent quality.
  • Maintenance fee payments. Companies that pay recurring maintenance fees on existing patents suggest that they find value in them.
  • Prior art disclosure. Substantial prior art disclosure implies the applicant has a deep understanding of the patent space. It also implies that the applicant considered prior art while drafting the patent application. Also, an examiner considers relevant prior art when reviewing a patent. Therefore, it may be harder to challenge the validity of granted patents with an abundance of prior art disclosure.
  • Post-Grant challenges. Patent assets that survive post-grant challenges such as inter partes reviews and ex parte reviews indicate higher patent quality. Patents that survive such challenges become less susceptible to subsequent challenges. Such successes also further assure patent validity over prior art.
  • Infringement wins. Patent owners who assert their patents and win infringement cases prove their patents have good quality. Proof exists in such cases because the patents do not become invalidated despite the efforts of accused infringers to do so.

As you can see, numerous factors exist that IP analysts must consider when determining the quality of patents. However, even with the highest quality patents, if the market does not believe the invention provides utility superior to others in the market, then the patents may have little value. Therefore, while patent quality is an important metric and one that must be considered by an IP analyst, it is only a small part of the larger patent valuation process.

Companies With the Most Patent Activity

Patents provide companies exclusive rights for a fixed period in exchange for the disclosure of an invention. They represent the legal right to exclude others from the market. This enables patent owners the ability to charge higher prices for a particular invention. Patents also provide protection in the event of willful infringement.

In patent lawsuit history, some cases have amounted to more than $1 billion in awarded damages. Such technologies that warranted the highest amount of awarded damages since 1995 involved the following: arthritis drugs, MP3 technology, noise reduction on circuits for disk drives, smartphone software, genetically modified soybean seeds, an operating system, vascular stents, an Internet browser, drug-eluting stents, and a device measuring blood oxygen levels. As indicated, patents protect a wide range of technologies. Without patent protection, the companies that prevailed in these cases would not have had the necessary tools to receive the awarded damages that they did.

This is one of the reasons that patent activity continues to increase each year. Some powerful companies are extremely aggressive with their patent filings. The following ten companies experienced the most patent activity in the last year. The patent activity total includes the number of grants and the number of patent applications from April 1, 2015 to April 1, 2016.

1.   IBM with more than 14,000.
2.   Samsung Electronics with more than 13,000.
3.   Canon with more than 7,600.
4.   Qualcomm with nearly 6,000.
5.   Toshiba with more than 5,700.
6.   Google with more than 5,500.
7.   LG Electronics with more than 5,200.
8.   Intel with more than 4,500.
9.   Sony with more than 4,400.
10. Samsung Display with nearly 4,000.

Not surprisingly, the top companies are technology companies. In the technology world, it often takes many parts of various inventions to make up one functional invention. For instance, smartphones offer a variety of options (e.g., screen unlock swiping mechanism, the design of the phone, etc.) that stem from inventions developed by various companies. Therefore, a smartphone may embody thousands of patents in order to make it a functional phone. In fact, hundreds of thousands of patents impact smartphones today. This is why there are constant patent wars between smartphone manufacturers. In order to stay competitive, these companies must arm themselves with the protection needed to win the constant battles that arise in this industry. Thus, technology companies are likely to remain the top companies in patent activity for a long time.

Due Diligence: A Necessary Component of the IP Valuation Process

The details in due diligence can make or break an IP value proposition. While IP due diligence often involves the same considerations of traditional business valuations, it also includes considerations specific to IP, such as verifying IP rights.

IP due diligence can be a long and tedious process. However, it is a necessary process for the most reliable and accurate IP valuations. Therefore, IP analysts must ensure they review all aspects of an asset that would affect the value proposition. The following are discrete analysis components of IP due diligence that analysts must factor into a valuation.

  • Performing initial interviews
  • Analyzing historical financials
  • Understanding the IP
  • Verifying IP ownership
  • Commissioning independent counsel review
  • Reviewing enforcement history and ability
  • Performing market analysis
  • Evaluating the regulatory environment
As indicated, the due diligence process involves heavy-duty analysis in a variety of areas. Within each of those areas are a host of other factors an analyst must consider. For instance, in verifying IP ownership, the analyst must consider a number of factors such as title, options & warrants, reversionary rights, and royalty obligations. In order to analyze these factors, an IP analyst may have to review a number of documentations such as patent filings, assignment agreements, inventor notebooks, employee agreements, and others.
Those analysts who consider all components that affect IP value provide solid valuations that can stand up in court, help generate capital, and assist in the buying or selling of IP.

Five Distinct Areas for Copyright Due Diligence

Performing due diligence is a critical part of the IP valuation process. It involves an in-depth review of a company’s intangible assets. Understanding all the aspects of an asset, including administrative aspects, provides the best and most accurate valuations. We discuss  five distinct areas of copyright due diligence next.

Each type of IP involves its own distinct areas of due diligence as they each bring value in different ways. For copyrights, the following areas are paramount when it comes to due diligence.

  1. Verify the nature of the copyrighted material. An IP valuation analyst must learn whether a copyright exists to protect a particular asset. Creators of copyrightable work must satisfy several requirements. If these requirements are not met, then the creator’s asset may have no value. For instance, copyright law excludes ideas, procedures, processes, systems, methods of operation, concepts, principles, or discoveries. However, it protects the expression of such items. Some clients may not always understand the distinction. Therefore, it is important for a valuation analyst to uncover such discrepancies and understand exactly what is being valued. Further, a valuation analyst must understand the strength of the copyright in order to associate an appropriate risk and discount rate.
  2. Verify the nature of the rights to value. Copyrights represent an established bundle of rights. Each right may have its own value proposition. The IP valuation analyst must determine which set of rights is the focus of the engagement. The methods that the analyst uses and the magnitude of the value proposition will generally vary based on the nature of the right under consideration.
  3. Consider administrative issues that can impair copyright value. An analyst must consider various administrative issues such as whether the work is registered, factual, made for hire, or is in the public domain. Further, the analyst must determine whether fair use erodes value, whether the copyright provides notice, and whether it is covered by the Visual Artists Rights Act of 1990. These are just a few of the administrative issues an analyst must consider.
  4. Consider special factors for software. Software presents a unique scenario among IP types in that it may simultaneously receive patent and copyright protection. When determining a software copyright value, an analyst must consider several factors. These include the ease in avoiding infringing activity, the consideration of the Rule of Doubt, and the complete or partial disclosure of the source code.
  5. Consider special factors for semiconductor designs or masks. A number of caveats exist under the Semiconductor Chip Protection Act of 1984. An IP valuation analyst must understand these caveats and whether a semiconductor design or mask meets these caveats. Whether the asset meets these caveats or not can greatly affect an asset’s value. Therefore, an analyst must account for these stipulations or risk providing an improper value conclusion.

As you can see, copyright due diligence is no simple task. It is imperative that an analyst review all aspects, administrative issues, caveats, and more for the most accurate valuation.