ISO 10668 Brand Valuation Standard

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Brand Valuation Standards

There are established valuation principles that are applicable to develop the quantification needed in those situations in which a trademark’s value has to be established.  These principles are applied either to report in financial statements upon an acquisition, to negotiate a license, or to assess the value in case of loss or damage in litigation.

The principles and corresponding valuation methods mentioned have been applied to the valuation of trademarks in a variety of circumstances for a very long time.  There is also a regulatory approach that has established criteria and standards that define and enumerate the methodologies and principles to value intangibles for donations, inter-company transfers, measuring capital gains, and other taxable events.  It is only as recently as 2010 that an international standard has been established:

ISO 10668

Under the title of “Monetary Brand Valuation.”[1] The ISO 10668 standard specifies a framework for brand valuation, including objectives, bases, approaches, and methods of valuation, as well as for sourcing quality data and assumptions. ISO 10668 also specifies methods for reporting the results of such valuation.[2]

The ISO 10668 standard defines “Brand” as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos and designs, or a combination of these, intended to identify goods, services or entities, or a combination of these, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits/values.[3]  In this sense, a trademark is only the legally protectable sign (or any combination of signs) capable of distinguishing the goods or services of a company from those of others.[4] The ISO definition of brand is consistent with the USPTO’s and GAAP definition of a trademark, but is narrower than the marketing conceptualization of Brand Equity.

The standard definition of the monetary value of a brand is that it represents the economic benefit conferred by a brand over its expected useful economic life. Generally, the monetary value is calculated by reference to cash flows, determined by reference to earnings, economic profits or cost savings.[5] 

There are three generally recognized approaches to measuring brand value: income, market, and cost. 

a)    The Income Approach measures the value of the brand by reference to the present value of the economic benefits expected to be received over the remaining useful economic life of the brand.[6] The steps followed in applying the income approach include estimating the expected after-tax cash flow streams attributable to the asset over its remaining useful economic life, and converting these to present value through discounting with an appropriate discount rate.

b)    The Market Approach measures value based on what other purchasers in the market have paid for assets that can be considered reasonably similar to those being valued.[7]  The application of the Market Approach results in an estimate of the price reasonably expected to be realized if the brand were to be sold. Data on the price paid for reasonably comparable brands needs to be collected, and adjustments made to compensate for differences between those assets and the brand under analysis. For selected comparables, multiples are computed on the basis of their acquisition price. Those multiples are then applied to the subject brand.

c)    The Cost Approach measures the value of a brand based on the cost invested in building the brand, or its replacement or reproduction cost.[8]  The actual cost invested in the brand comprises all costs spent on building and protecting the brand up to the value date. The cost to replace the brand shall include the cost of constructing a similar brand of equivalent utility at prices applicable at the time of the valuation analysis. The reproduction cost shall represent the cost to be incurred, at the value date, to recreate a similar brand and shall be adjusted in order to take into account potential losses of awareness and strength.

The bases of the international standard are also consistent with appraisal principles applied in economics and, particularly, in generally accepted infringement damages analyses.

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[1] The International Organization for Standardization (ISO) published the standard on September 1, 2010, available at:
[2] ISO 10668, at §1.
[3] ISO 10668, at §2.2.
[4] ISO 10668, at §2.8.
[5] ISO 10668, at §4.2.
[6] ISO 10668, at §5.2.
[7] ISO 10668, at §5.3.
[8] ISO 10668, at §5.4.

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