What Is a Brand Worth? Trademark Valuation, Royalty Rates, and the Numbers Behind the Name
By Casey Scott McKay ·
Brands appear on balance sheets, in tax filings, in transfer pricing studies, in loan collateral packages, and in damages testimony - and each of those contexts values the same asset differently, using different methods and reaching different numbers. This article explains how trademark valuation actually works. It covers the three approaches - cost, market, and income - and the three income methods that do most of the real work, with the arithmetic for each. It explains why an internally developed brand generally cannot appear on a balance sheet while an acquired one must, and what that asymmetry does to purchase price allocations and impairment testing. It works through royalty rate determination, including the Georgia-Pacific factors and why the Federal Circuit rejected the twenty-five percent rule of thumb. It then covers the tax treatment of acquired marks, the transfer pricing rules that govern intercompany brand licensing, and the financing structures that treat a trademark portfolio as collateral. It closes with valuation in litigation, where the numbers are contested rather than negotiated.
IP and Technology > IP and IT in Corporate Transactions | Article | Published 14 July 2025 - Updated 20 August 2025 | Casey Scott McKay - marksy.us
Summary. Brands appear on balance sheets, in tax filings, in transfer pricing studies, in loan collateral packages, and in damages testimony — and each of those contexts values the same asset differently, using different methods and reaching different numbers. This article explains how trademark valuation actually works. It covers the three approaches — cost, market, and income — and the three income methods that do most of the real work, with the arithmetic for each. It explains why an internally developed brand generally cannot appear on a balance sheet while an acquired one must, and what that asymmetry does to purchase price allocations and impairment testing. It works through royalty rate determination, including the Georgia-Pacific factors and why the Federal Circuit rejected the twenty-five percent rule of thumb. It then covers the tax treatment of acquired marks, the transfer pricing rules that govern intercompany brand licensing, and the financing structures that treat a trademark portfolio as collateral. It closes with valuation in litigation, where the numbers are contested rather than negotiated.
Keywords: trademark valuation · relief from royalty method · multi-period excess earnings · premium pricing method · cost approach · market approach · georgia-pacific factors · uniloc twenty-five percent rule · asc 805 purchase price allocation · asc 350 impairment · ias 38 internally generated brands · iso 10668 · section 197 amortization · section 1253 · section 482 transfer pricing · brand securitization · ip backed lending · reasonable royalty trademark · corrective advertising damages
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