Intellectual property (IP) isn’t always the most glamorous of topics; however, it did make a red-carpet appearance in the defamation trial between actor Johnny Depp (plaintiff) and his former wife and actress, Amber Heard (defendant).
During the trial, an IP damages expert witness testified that Depp’s image had been damaged as a result of allegations made by his ex-wife. Mr. Depp made claim for three counts of defamation for $50 million in damages, and Ms. Heard initiated a counterclaim for $100 million.
What is intellectual property?
According to the World Intellectual Property Organization (WIPO), “IP refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.” Legal protections such as trademarks and patents seek to safeguard IP by allowing businesses or individuals to be recognized for such creations. Some of the most common intangibles recognized as IP include patents, copyrights, trademarks and trade secrets.
How is IP valued?
The following are common approaches used to value IP:
- Income Approach – The income approach determines the value of IP by assessing its income-generating ability, based on expected cash flows, its economic life and a discount rate.
- Market Approach – This approach uses market data related to recent transactions of similar IP in similar markets to determine value.
- Cost Approach – Often used when the IP is not yet producing cash flows, the cost approach determines value by calculating the cost to reproduce or replace the asset.
The Trial
After six long weeks, the jury began deliberations on Friday, May 27, 2022, and delivered a verdict on June 1, 2022. The jury awarded Depp $10 million in compensatory damages and $5 million in punitive damages (reduced by the judge to the state’s statutory punitive damages maximum of $350,000). Heard was awarded $2 million in compensatory damages.
Schneider Downs has extensive experience performing intangible asset valuations as well as damages calculations. For more information about our advisory services, contact Thomas Pratt at 412.697.5615 or [email protected] or Steve Thimons at 412.697.5281 or [email protected].
