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As part of Ethiopia’s legal framework reforms and the economy opening up, the government has introduced the use of intellectual property rights as collateral for bank loans. Following the Movable Property Security Rights Proclamation and the subsequent Movable Collateral Registry directive the National Bank of Ethiopia has begun financing IPRs. According to news sources, this process has already started and almost 70 thousand entries have been registered in the Movable Collateral Registry.
What might be a major issue down the line is the valuation of these IPRs. What monetary value is to be granted to a specific right i.e. (Patent, Trademark or Copyright)? Valuing IPRs can be a complicated process which requires in-depth knowledge of the economy and the specific type of IPRs you are dealing with. It can also be subjective and there is no one-size-fits-all approach but the most commonly used methods are: –
- Cost approach: This method appraises the value of the IPRs by assessing the cost it took to develop, acquire or create it.
- Income approach: This method appraises the value using the income it has generated and is currently generating.
- Market approach: This method appraises the value based on the prices paid for similar IP assets in the market.
The need for the protection of intellectual property rights is not well understood in Ethiopia. As a result the valuation of these IPRs is almost non-existent. However, the Ethiopian Intellectual Property Authority (EIPA) had developed and put in place an IPR marketplace to facilitate the commercialization of granted inventions by making detailed information about the inventions and contact details of owners available to the general public on its website. This created a platform where the IPRs will be directly valued by relevant stakeholders. This may create another way of IPR valuation in Ethiopia.
Rewina Birhanu
