Any valuation model for IP assets must take into account both business parameters and legal issues. The effect of legal considerations on business projections are key to deriving a quantitative value for IP assets

A formula must include variables for the strength of the asset and the projected market and how the strength of the IP extends or maintains or reserves market share over the life of the IP. The formula may also take into account the state of development of the business which the IP protects. Generally, the further along the business along the path of development from initial concept to commercial distribution, the more valuable the associated IP. This increase in value stems from the increase in the value of the underlying business and arises as an increase in net present value of the business.