valuation & consulting in Russia

VALUATION Corp. Provides Valuation of Know-How (Trade Secrets) in Moscow and Russian Regions

In modern Russian economy, closely held commercial or technical information capable of bringing economic benefits often represents an important and quite valuable asset. Such information is regarded as intellectual property and it can be a major element of a working business. Usually this type of information is referred as know-how, or trade secret.

Know-How as IP object in Russia

According to Russian law, know-how (also known in Russia as “trade secret”) is any information about the results of scientific and/or technical researches or about the methods of organizing professional activities, information of technical, financial or administrative nature that brings or potentially can bring economic benefits because this information is confidential and available (known) only to a strictly limited group of people, and for all others it is kept in secret.

Know-how in Russia is considered to be an intellectual property, but unlike inventions, utility models or industrial designs, know–how is not patentable. Therefore the fundamental condition for classifying useful information (results of R&D, design, engineering and technological works, etc.) as know-how is compliance with the regime of strict confidentiality, i.e. the circle of persons having access to information constituting know-how should be strictly limited.

According to Russian civil law, the exclusive right to know-how has no limitations on duration, but when the information that constitutes know-how appears in the public domain, the exclusive right to this IP object ceases to exist simultaneously for all right holders.

In order to classify information as a know-how in Russia it is necessary to verify that the following conditions are met:

Only with the simultaneous fulfillment of all the above conditions, the information can be classified as an intellectual property (know-how) and get legal protection from the state, similar to other non-patentable IP objects. But if the exclusive right holder does not take reasonable measures to keep his know-how closely confidential, then he may lose the exclusive right to his intellectual property (see definition of the exclusive right in Russia).

It should be mentioned that if non-exclusive right to use know-how is granted under license agreement, than the licensee must also take all reasonable measures to prevent accidental disclosure of the subject know-how.

Know-How Valuation Services

As an object of intellectual property, know-how (trade secret) can be an essential element of business and occupy an important place in the structure of company’s assets. The rights to know-how are property rights and can be sold or otherwise transferred, including transferring of non–exclusive rights under a license.

Market value of know-how grossly depends on total economic benefits it can bring to the company (or to its competitors should they get hold of). Therefore, valuation of know-how (such as R&D results, technologies, technological improvements, industrial formulas, etc.) is mostly done with income approach to appraisal, taking into account actual or potential commercial profit expected to be generated by the asset.

Our firm has been providing professional services for independent valuation of know-how (trade secrets) and other objects of intellectual property in Russia for more than 20 years now.

We have experience in know-how valuation for the different purposes, including, but not limited to:

For more information on our services and on valuation of know-how in Russia, please contact us.

Required Information for Valuation of Know-How

  1. General description of the subject know-how.
  2. Nomenclature and characteristics of goods (services) produced using the subject know-how.
  3. Sources (both planned and existing) of income from the use of the subject know-how.
  4. Description of economic benefits from use of the subject know-how, for example:
    • Increase in sales volume when using the subject know-how;
    • Increase in price attributable to the product quality achieved from use the subject know-how;
    • Savings in production costs attributable to the application of the subject know-how.
  5. Annual sales of products produced using the subject know-how for the last 3-5 years (if the subject know-how is used commercially).
  6. Business plan for the next 3-5 years with projected annual sales of products produced using the subject know-how (if the subject know-how is not in use yet).
  7. Internal corporate documents, confirming taking reasonable measures to protect confidentiality of information, constituting the subject know-how.

Depending on the purpose of valuation and other factors, the above list of information and documents may be reduced or expanded after our detailed review of the valuation assignment.

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