Industry Updates

Get The Answer With ISO 10668:2010
The intangible assets of a business,
including its brands are often said to be their most valuable assets. However,
as brands are intangible assets, convincing others of the actual monetary value
of a brand depends on acceptance and credibility of the method of valuation.
In October
last year, in a significant development for brand valuation methodology, the
International Standards Organisation (ISO) published an international standard
for monetary brand valuation.
ISO
10668:2010 Brand valuation Requirements for monetary brand
valuation specifies uniform requirements and procedures for monetary brand value
measurement.
Unsurprisingly,
the ISO standard rubber-stamps the three main methods of brand valuation that
have commonly been used by legal practitioners and financial services
professionals to evaluate brands. ISO 10668:2010 states that brands may be
valued by applying the income, market or cost approaches, says Christophe van
Zyl, senior associate at IP law firm Adams & Adams. It also details how
each approach is to be implemented.
According
to van Zyl, the ISO guideline is significant for a number of reasons.
Among
these is uniformity. There have always
been personal preferences of the approaches by individual practitioners when
measuring brands. ISO 10668:2010 creates uniform procedures and methodologies
for each of the three main methods of brand valuation, says van Zyl.
Practicality
also constitutes an important part of the evaluation. According to van Zyl, it is now
possible to create an acceptable standard of valuation for both the seller and
the purchaser by stating that the value of the brands shall be determined
according to a particular method and in accordance with specific guidelines in
ISO 10668:2010.
ISO 10669:2010 should be embraced
by authorities, businesses, auditors and even business brokers. It brings
integrity to brand evaluation. If the guidelines of ISO 10669:2010 are applied,
it becomes more difficult to inflate or reduce the apparent value of a business
by using methodology or procedures that are unconventional or inconsistent with
consistent practices.
ISO
10669:2010 could in many ways be seen as an acceptable boni
mores for
brand value auditing.
Van Zyl
says there are a number of definitions for a trade mark in legislation that regulates
the monopolisation of signs that are used to distinguish goods or services in
the course of trade.
Statutes
in different countries are not consistent. Also, a brand from a financial
perspective and a trade mark in a legal regulatory sense are not seen by industry
to be one and the same. ISO 10668:2010 provides certainty in defining a brand.
For the
purpose of brand evaluation, ISO 10668:2010 defines a brand to be:
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, entities, or a combination of
these, creating distinctive images and associations in the minds of
stakeholders, thereby generating economic benefits/values.
Van Zyl
says it is notable that ISO 10668:2010 does not make it compulsory for a brand
to be registered as a trade mark in order for it to be identifiable as an asset
that may be separated from the goodwill of a business. It is significant, as the
Courts in many countries, including South Africa, have indicated that a so
called unregistered trade mark cannot be separated from the goodwill of a
business and must be sold together with a business as a going concern.
The
current definition of a brand is intended to avoid technical legal issues
when determining the value of a business for the purposes of a sale transaction
but, for many purposes, a mark will have to be registered in South Africa for a
valuation to be relevant.
At this
time ISO 10669:2010 has not been recognised by the South African Bureau of Standards.
However, as ISO 10669:2010 is applicable in various countries that are members
of the International Standards Organisation, ISO 10668:2010 is a standard that
is practical and ought to be considered as a guideline for brand evaluation in
South Africa, says van Zyl. Copies of ISO 10669:2010 may be purchased from the
ISO through its website.
About
Christophe van Zyl
Christophe van Zyl graduated in 2005
with an LLB degree from the University of Pretoria and commenced articles at
Adams & Adams in 2006. He qualified as an attorney in 2008 and a Trade Mark
Practitioner in 2009. Christophe specialises in trade mark and branding
litigation, copyright issues, advertising and marketing law, unlawful
competition, domain name disputes and general legal advice regarding commercial
aspects of intellectual property.