Commercial Value

What exactly is the commercial value of something? Clearly the answer to this depends upon a great many different things – what the item is and what the circumstances are. The commercial value of a lap top computer, for example, will depend upon the make, model and age of the item as well as the circumstances in which the valuation takes place. If the lap top computer is sitting at the bottom of the Indian Ocean in a yacht that went down in a storm, its actual commercial value is zero (unless covered by insurance).

It is not just solid objects that have commercial value though. Intellectual property and goodwill must also be considered to have commercial value. The owners of intellectual property frequently take advantage of its commercial value when they allow others to use it in some proscribed way. For example, allowing someone to use a brand name belonging to you under license would guarantee you a recurring income from royalties as well as giving the brand name more visibility in the marketplace.

One of the more common ways in which the commercial value of intellectual property is utilized is in franchising. Franchising is a method of doing business where a franchisor licenses trademarks as well as tried and proven methods of doing business to a franchisee in exchange for a recurring payment, and usually a percentage piece of gross sales or gross profits as well as the annual fees. In most cases the franchisor is a business that has proven commercial value (for example a chain store or fast food outlet). Various support services such as advertising and training are generally made available by the franchisor, and may indeed be required by him. This generally requires audited books, and may subject the franchisee or the outlet to periodic and surprise spot checks.

Clearly then the commercial value of, for example, a well-known company such as Coca Cola can be attributed to several items that include its working capital, its assets and its intellectual capital. In this particular case the intellectual capital of the Coca Cola trademark is immense, but to place an actual monetary value on it is not so easy and would involve a very careful audit of all aspects of the company’s intellectual property.

A trademark is an important way for a business to build up goodwill and to develop the commercial value of its intellectual property. Registering that trademark is the best way to protect that property’s prolonged existence and value. Registering a business name does not grant any rights in that name. But registering a trademark does give you certain automatic rights. So, if you register your business or product’s name as a trademark, it stops other businesses from using the trademark for the same or similar goods or services. A trademark, once registered, becomes valuable intellectual property that can accumulate exceptional commercial value. For further information on this issue, you should contact an Intellectual Property Attorney.