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Many companies’ most valuable assets are patents, trademarks, copyrights, and trade secrets. Recent studies have found that intellectual property and intangible assets comprise over 80% of S&P 500 company value, compared to below 20% in the 1970s. Engaging in transactions, such as acquisitions and license agreements, with appropriate values and terms is often critical to shareholder value. Moreover, properly recording and reporting intellectual property values in company financial statements is important to understanding the company’s financial position. However, these valuations can present challenges as intangible assets are typically complex and their values can swing with important factors such as validity, competition, and market opinion and reputation, having the potential to cause intellectual property to go from being of minimal value to great value and back again. In this context, pursuing or defending against misappropriation or infringement claims can become make-or-break events for companies and others involved in such disputes.
Hemming Morse’s team is made up of experts with deep experience in a wide range of specialty areas relevant to our analyses. These include:
- Appraisal of intellectual property assets and companies in which intellectual property is a significant part of their value
- Calculations and research in support of license negotiations
- Accounting and disclosures under Generally Accepted Accounting Principles and international accounting standards
- Royalty examinations and investigations of contract compliance
- Consultation on trade secret protection processes
- Large-scale data, statistics, and forecasting
- Market research and coordination with survey and technical experts
- Economic analysis of damages in intellectual property disputes
- Development of schedules and graphics to clearly communicate complex issues
- Testimony at trials or other proceedings
Our work relating to intellectual property requires thoroughness and attention to detail, considering information instructive to issues such as licensing rates and terms, design-around and non-infringing substitutes, objective indications of consumer demand (e.g., surveys and conjoint analyses), price erosion, marketing of products and features, product and company sales and profitability reports from accounting systems, acquisitions and mergers, and apportionment of value between infringing and non-infringing elements. We dig deep to fortify our opinions and conclusions with data and investigation, complemented by our experts’ experience and diverse resources across the firm.
Consultation on Trade Secret Protections
After the chief executives of the operator of mobile home parks departed and started a competing business, Hemming Morse was hired to assist the company analyze the company’s practices regarding certain of its intellectual property assets. The Hemming Morse team conducted interviews and performed research to identify what trade secret protections were in place, as well as what policies and protocols should be enacted to properly protect valuable information in the future to maintain the company’s market-leader position, as well as to avail trade secret treatment of valuable confidential information.
Trademark Damages Regarding “King of Pop” Trademark
The estate of a famous musician and his licensing company sued a company that sold popcorn online, alleging that the popcorn company’s use of the phrase “King of Pop” infringed the plaintiffs’ trademark. The Hemming Morse expert quantified monetary remedies available under the pled causes of action, including lost profits, avoided licenses paid, and defendant’s profits. As part of the analysis, information considered included the artist’s and licensing company’s history of agreements, the nature of use by the defendant, other users of the mark and similar marks, and the revenue and profits of the defendant. The Hemming Morse expert authored a Rule 26 report and provided expert testimony on the analysis.
Patent Damages Regarding Vehicle Tracking Technology
A company with patent rights relating to vehicle tracking devices sued a company that sold a line of trackers alleged to infringe the patents-in-suit. The team analyzed the market for the subject technology, the plaintiff’s licensing history, use by the defendant of the technology in the accused products and marketing of those products, price premia, cost savings, and the cost of possible design around and non-infringing alternatives. The expert testified at a deposition and trial.
Trade Secret Damages Regarding Theft of Contact Information
Senior executives at a company that provided nurse staffing to several hospitals left the company and joined a competitor, with many of the nurses and hospitals that worked with the executives’ former company moving to the competitor and reducing their business with the plaintiff. The Hemming Morse expert quantified monetary remedies available under the trade secret misappropriation and other causes action, testifying at a deposition and trial in the matter.
Royalties Owed and Royalty Examiner’s Compliance with Professional Standards
An accounting firm with a deep relationship with a licensor of technology used in flash memory performed a royalty examination of a licensee of this technology, concluding that the licensee had significantly underpaid royalties. The licensee disputed the findings, which led to a trial and termination of a supply relationship between the licensor and licensee. At issue were critical and impactful positions taken by the accounting firm, as well as evidence of the extent of support for these positions and the relationship between the accounting firm and the licensor. Our expert performed an analysis of royalties owed under several scenarios, also testifying about the accounting firm’s conduct on its investigation and compliance with professional standards applicable to royalty examinations.
Appraisal of Trademark, as a Neutral
Two parties each claimed to own a trademark used in the sale of groundwater collection devices. The Hemming Morse team, as a neutral working for both parties, appraised the trademark for use in settlement negotiations. The analysis considered the revenues and profits of multiple companies using the subject mark, and an undisclosed license out of the subject mark by one of the parties asserting ownership in the mark.
Appraisal of Copyrights in Film and Footage Lost in Fire
A fire resulted in the loss of raw footage in and for media productions in development, including television programs, movies, and marketing and advertising. The Hemming Morse expert appraised copyrights in the lost footage to assist the claimant and insurance company in determining the payout on the loss. The appraisal considered the market for the projects in process as of the time of loss, the status of the projects, comparable productions, the producer owner’s history and experience with these and similar productions, and outside opinions on production budgets.
Consulting on License Terms and Royalty Rates
A company that owned rights to a well-known sportswear brand sought the assistance of Hemming Morse to value the brand and its exclusive promotional relationships with athletes in support of negotiations with distributors in particular regions around the globe. The Hemming Morse team analyzed the market, revenues and profits of the entities in question, use of the brand and athletes in product promotion, market royalty rates, and costs to license the athletes’ rights to assist in development of a license agreement.
