Valuation for creating a market for intellectual property.

First and foremost are legal barriers and the psychological fear of making mistakes or losing state capital regarding public assets. Most intellectual property rights at research institutes and universities are created using state budget funds. Laws governing public asset management lack a flexible valuation mechanism for intangible assets, which inherently carry a very high commercial risk. Managers constantly face legal risks: undervaluation risks being held responsible for the loss of state assets; overvaluation makes it difficult for buyers to accept. Most leaders/managers choose the safe option of continuing to store the assets in warehouses.

Secondly, there is a serious lack of market data. Valuing intangible assets requires comparative data on transfer prices and royalty rates in past transactions (or, in short, comparable transactions). Because the Vietnamese market is still very nascent, technology transactions are largely confidential or not registered in the system, leading to a lack of reference data for valuation firms. This results in unconvincing valuations, and the valuation process is overly reliant on the subjective assumptions of experts.

Thirdly, there are limitations in the methodology and capacity of the intermediary organizational system. The team of appraisers in Vietnam currently mainly has experience in valuing tangible assets. They lack in-depth valuation methods for intangible assets.

Fourth, there are barriers from the financial and banking system. Due to low liquidity and the risk of patent invalidation, credit institutions almost always refuse to accept intellectual property rights as collateral. Banks lack a secondary market to handle intellectual property collateral when bad debts arise, leading them to hesitate to accept it as collateral. Without sufficient credit capital, intellectual property rights cannot effectively serve as a financial leverage tool. The valuation serves as a reference point, while the actual transaction price depends on many different factors.

Fifthly, there is the unique characteristic of intellectual property. Unlike tangible assets, the value of intellectual property does not lie in the object itself but in its ability to generate future revenue. The same invention can have vastly different values ​​depending on the entity’s exploitation capabilities, market size, and accompanying supporting assets. The large gap between laboratory research results (early stage) and the finished commercial product makes predicting future revenue streams highly uncertain.

Criteria, methods, and implementation mechanisms

For the pilot program to be truly effective, its implementation needs to be well-designed, from the selection and evaluation stages to the recognition of results.

Regarding selection criteria, focus should be placed on three main groups: Firstly, those with clear legal status, including inventions, utility models, and plant varieties that have been officially granted protection and are free from disputes or claims. Secondly, those with a high degree of technological readiness: For technological assets, the Technology Readiness Level (TRL) scale can be used as an indicator; for other types of rights, a corresponding set of indicators on market readiness, exploitability, and legal weight is needed. Thirdly, those with representativeness and market commitment: priority should be given to assets that have already been ordered by businesses or have made reciprocal commitments to receive transfers, contribute capital, or acquire them.

Regarding valuation methods, a flexible combination of approaches should be applied depending on the nature of the asset. For example, for intellectual property rights used for licensing, the royalty discount method should be applied; for startups seeking funding, the discounted cash flow method adjusted for technology risk should be applied; and for early-stage, high-risk technologies, the real options analysis method should be applied. In general, valuation should be separated from monetary valuation; based on this, fundamental methods (according to WIPO – World Intellectual Property Organization) such as the cost method, market method, income method, and several others can be applied.

Regarding the process and the entities involved, the valuation must be carried out by a consortium (such as professional valuation organizations, experts in intellectual property, technology, finance, etc., Technology Transfer Organizations – TTOs, etc.); the process must be standardized (selection, legal assessment, scope of protection, etc.). The process can be designed at a more detailed level, and in cases with high value or complexity, an assessment by the business or potential investor should be included.

Regarding the mechanism for recognizing and utilizing the results, in addition to assigning responsibilities to ministries, the Ministry of Finance and the Ministry of Science and Technology need to issue guidelines for recognizing these pilot valuation certificates as valid reports. The valuation results will be used by institutes and higher education institutions to account for asset increases, set a floor price for negotiations on transfers, or contribute capital to establish spin-off companies.

Conditions for scaling up after the pilot phase.

The pilot program is only successful when it lays the groundwork for the formation of a synchronized and sustainable operational system in the future. WIPO emphasizes that there is no single valuation model suitable for all intellectual property. The method must depend on the purpose of valuation, the level of maturity, the sector, and the market context.

Firstly, the legal framework for risk liability exemption mechanisms needs to be perfected. If managers of public assets properly and fully follow the valuation process and publicly disclose transactions as stipulated in the pilot regulations, they will be exempt from personal liability if the assets subsequently fail to be successfully commercialized or decrease in value due to market fluctuations.

Secondly, establish a national data bank (national database) on the valuation and transaction of intellectual property assets. All data on costs, valuation methods, license agreements, and actual transaction prices from the 100 pilot intellectual property rights must be digitized, encrypted, and made publicly available (to an appropriate extent). This will serve as a standardized input data source for the market to reference in subsequent transactions.

Thirdly, standardize and enhance the capacity of the intermediary organizational system. WIPO emphasizes that valuation plays a crucial role in technology transfer, investment, and commercialization, and that a lack of professional capacity is a major obstacle. Therefore, it is necessary to issue a specific Vietnamese valuation standard for intellectual property assets; and at the same time, develop a national training program to certify intellectual property valuation experts with integrated knowledge, especially in law, technology, and finance.

Fourth, in addition to creating “supply,” it is necessary to establish market “demand,” that is, to link it to specific commercial needs, as well as to form a market verification mechanism and develop risk-sharing tools. Pricing must be closely linked to the real needs of businesses. Besides the Intellectual Property Credit Guarantee Fund established by the Government , insurance companies should be encouraged to develop patent liability insurance products to minimize risks for the banking system when accepting intellectual property as collateral.