How to Value & Protect Your Intellectual Property

For many entrepreneurs, especially those in tech, the question is not whether their IP has value, but how much value it has, how it could be further developed, and how well it’s been protected. Could your business be sitting on a hidden IP goldmine?

Introduction

Intellectual property (IP) is the invisible Iron Giant of the US economy. In 2019 (the most recent data available), IP-rich industries accounted for roughly 40% of US GDP and employed about a third of all workers. Since then, with the advent of AI and other advanced digital technologies, IP valuations have grown far faster than GDP—and experts expect this will continue. So, how do you nurture, value, and protect your intellectual property?

First, What is IP?

IP has been traditionally defined as the ‘intangible creations of the human intellect.’ But with AI now generating huge quantities of content and code, courts are wrestling with how to apply that definition. Perhaps it will be the case that AI-generated material won’t qualify as IP unless it is determined to contain meaningful human input. (How you do that is anyone’s guess.)

At any rate, US law protects IP ranging from innovative technologies to iconic brand symbols. Specifically, four types of IP are protected by law.

The Four Flavors of IP

Warning: Some might consider the distinctions between types of IP and how to maintain them to be rather academic and, well, boring. That may all be true until you understand how much value is at stake when you do so properly… or don’t.

Patents

• Utility Patents cover functional inventions and typically cost $8,000 to $15,000 to draft and file, plus $15,000 to $30,000 to prosecute. Granted patents protect for 20 years from the application filing date.
• Design Patents protect the ornamental (visual) design of an object, not its functional utility. They last 15 years from the patent grant date. Expect annual maintenance fees.

Trademarks

Protect brand names, logos, colors and other identifiers. USPTO filing costs start at about $350 per class. Expect 12 to 18 months for approval, depending on whether you encounter objections. Must be renewed every 10 years, or you may lose it.

Copyrights

Protect creative, written, artistic, and software works. Protection lasts the creator’s life + 70 years, or 95 to 120 years for corporate/anonymous works. Copyright exists automatically upon creation, but registration is required to bring an infringement lawsuit and seek damages.

Trade Secrets

Protects proprietary information that provides a competitive advantage. Includes formulas, algorithms, manufacturing processes, pricing logic, business strategy, and source code. By definition, trade secrets aren’t registered with any government body, but you must nevertheless actively protect them. Use NDAs, access controls, and write up internal protection policies.

IP’s Role in M&A

When buyers value your business, they consider whether you’ve created, applied for, and protected your IP. They also want to know if that IP is “organic” or “inorganic.” If denying the company access to certain IP would materially reduce its growth or margins, that IP is “organic.” The usual example is valuing Coca-Cola without the rights to its syrup formula. Obviously, were that to occur, the company would be worth far less.

Financial buyers pay particular attention to organic IP because, to the extent it exists, they don’t have to value the target based on theoretical synergies with a portfolio company “platform.”

In contrast, a buyer could spin off a seller’s inorganic IP without affecting its cash flow.

How to Value IP

It’s rarely simple. Doing so requires IP valuation specialists, and even then, their estimates can vary widely. Still, you as owner will benefit from understanding the main valuation methods:

• Relief from Royalties: the most common technique, it values IP based on the royalty payments avoided by owning rather than having to license it.
• Market Approach: looks at comparable IP sale or licensing transactions. Useful when enough comparables exist.
• Cost Approach: estimates value based on the cost to develop the IP. Somewhat useful in valuing IP if it’s never been exposed to market demand.
• Option Pricing Models: Used when market demand or the IP’s utility is uncertain. Most often applied to emerging technology patents.
• Technology Factor Method: Estimates future cash flows and adjusts them based on IP maturity and legal strength.
• Putting It All Together: No single method is definitive; valuation is most reliable when two or more approaches produce similar results.

The Market Test (When in Doubt)

If the valuation methods above produce scattered results, consider retaining an M&A advisor to test the market by soliciting indicative bids. This can produce a more accurate real-world valuation—but requires time and a genuine willingness to consider selling the IP. No buyer wants to participate in somebody’s valuation test.

Now, If You’ve Got Some IP, Take These Steps

• Identify It: Catalog inventions, designs, brand assets, algorithms, workflows, formulas, and proprietary processes.
• Grow It: Broaden existing IP or develop related IP that builds on current strengths.
• Shields Up: Apply the appropriate protections: patents, trademarks, copyrights, NDAs, and internal security practices.
• Monitor for Infringement: Enforce your rights. Inaction can weaken claims.
• Keep Documentation Current: Maintain a clear chain of ownership and up-to-date registrations.
• Review and Update: Conduct periodic IP audits to identify gaps and new opportunities.

Got questions about valuing and protecting your IP? Email us.
Revised 2/3/26. © 2026 Kuhn Capital, Inc. All Rights Reserved