CLP Licensing Valuation & Financial Analysis Flashcards
6 cards from real CLP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CLP Licensing Valuation & Financial Analysis flashcards as text
Which approach to IP valuation is most appropriate when the IP has no comparable market transactions and generates no direct revenue yet?
Answer: Cost approach
The cost approach values IP based on the expense to recreate or replace it, useful when market data and income projections are unavailable.
A royalty rate expressed as a percentage of net sales is reduced by a 'royalty stack deduction.' What is this deduction for?
Answer: To account for royalties owed to third-party IP holders whose rights are also used in the product
A royalty stack deduction allows the licensee to reduce the agreed rate when additional royalties must be paid to other IP owners for the same product.
What financial document would a licensor primarily review to verify reported royalties are accurate?
Answer: Licensee's royalty statement and supporting sales records
Royalty statements paired with underlying sales records (invoices, ERP data) are the primary documents reviewed to verify royalty accuracy.
In discounted cash flow (DCF) analysis for a license deal, a higher discount rate will:
Answer: Reduce the present value of future royalty streams
A higher discount rate reduces NPV because future cash flows are penalized more heavily for time and risk.
What is a sublicense fee, and how does it differ from a running royalty?
Answer: A fee paid by the licensee to the licensor when granting sublicenses, separate from product-based royalties
A sublicense fee is a percentage of revenue the licensee receives from sub-licensees, shared back to the licensor, distinct from royalties on the licensee's own sales.
Which Georgia-Pacific factor specifically addresses the anticipated profit the licensee will realize from using the patented invention?
Answer: Factor 13 — the portion of realizable profit that should be credited to the invention
Georgia-Pacific Factor 13 considers what portion of the licensee's anticipated profit is attributable to the invention versus other elements.