I recently participated in a meeting where a number of company IP managers met with several major IP brokers to discuss how to work together more effectively.  In the course of the conversation the words “value” and “valuation” were used a number of times, but I got the sense that people were not communicating when they spoke about value.  It caused me to think a bit about this interesting word “value”.  I went on-line and found there were over two dozen meanings for the word in the one abridged dictionary that came up. . . . . . . . my gosh, think how many definitions an un-abridged dictionary might contain for the word!

There were meanings associated with a number of fields that surprised me: sociology and  music, for example.  There were definitions of “value” in fields that were expected, such as business, mathematics, and philosophy.  In the area of business, I could find at least five different definitions that I have heard frequently used by people in business (and many were in use in the meeting I was attending.)  No wonder we often find discussions about IP value and valuation to be confusing.  It may well be that one of our difficulties is that we are speaking past one another. . . . . . . using the same words and phrases but with different definitions for each of us.

I doodled a bit on my notepad and was able to list five very different implicit meanings for the word “value”:

            - Value is what an item is worth to a specific person or entity

- Value is the price or the monetary amount asked by a seller in exchange for an item

- Value is the transacted price or the actual monetary amount exchanged for an item

- Value is an estimate of a potential transacted price, or

- Value is an estimate of the worth of an item to a specific person or entity

            Each of the definitions of “value” above are different, yet all five are used to convey the concept of “value”.  While I am not yet ready to propose a new set of words or a new “language” for discussing IP value and valuation, I wonder if we might not use plain old English, but be a bit more precise about what exactly which meaning we intend when we use the overarching word “value”.   For example, could it be as simple as replacing the word “value” with words such as the following to less ambiguously convey each of the five different meanings above?

-          Worth: the value of an item to a specific person or entity

-          Price: the monetary amount a seller asks for an item or object to be sold

-          Transacted price: the monetary amount actually exchanged in a sale that has already occurred

-          Estimate of monetary price: a valuation of the expected price at which an item would be exchanged in a sale in the future

-          Estimate of worth: a valuation of the current worth of an item to a specific person or entity

I would be curious to hear from readers of this blog to let me know your thoughts about two things:

1. whether you believe there is any confusion associated with language

2. what you think about the need for some agreed language to help us avoid misunderstandings when we are talking about IP value and valuation.