Wednesday, 3 March 2010

Valuation of copyright in drawings and equipment manuals

A correspondent has written to ask the following:

"I have a question relating to valuation of copyrights in drawings and instruction manuals of plant and equipment (e.g. machinery).

Is the value of the copyright separately identifiable from the plant and equipment or is the value inherent in the value of plant and equipment?

If it is separately identifiable, then how does one value the copyright if there is no market for these drawings and instruction manuals?"
I suspect that readers of this weblog may have some useful guidance for our correspondent. Please post your comments below, if possible, of email them to me here.

2 comments:

Fernando Torres MSc said...

Economically, works have no intrinsic value unless there is some demand for them, and financial reporting standards not only require separability but also a market-based valuation. That said, the use for drawings such as those in this post can have a variety of uses well beyond their original purpose, as decor or graphics for apparel, etc. Sometimes, the infringing use by others provides a valuation context given the statutory or unjust enrichment damages potential (see
The ultimate arbiter of value is the context in which the intangible will be best used.
At least that is the approach I take in my own IP valuation work.

Ana Maria Popescu said...

Is the value of the copyright separately identifiable from the plant and equipment or is the value inherent in the value of plant and equipment?

The copyright value can be separately identifiable from the plant and the equipment as long as it is unique in a why - in the remote case in which no one can use the plant/equipment without the use of the copyright material (in one way the copyright has to be a trade secret). Then the value of the copyright is identifiable and it represents the price of the one company would pay for being able to use the plant/equipment.

If it is separately identifiable, then how does one value the copyright if there is no market for these drawings and instruction manuals?

The value of most IP is circumstantial, the word value is in many ways wrong and should be replaced with the word worth. If there is no market for the copyright material then there is no demand for it - which means they are not unique or crucial for any actor (thus they are not really separable). This, in turn means that they have no or little worth.