CLM 002 - KRQ

docx

School

Defense Acquisition University *

*We aren’t endorsed by this school

Course

002

Subject

Business

Date

Feb 20, 2024

Type

docx

Pages

Uploaded by elizabethkegley

CLM 002 – Intellectual Property (IP) Valuation Knowledge Review Questions Google LLC is a multinational technology company that specializes in web-based products and services, such as its famous search engine, Google Classroom, and Gmail. Which of the following assets are Google’s intellectual property? Select all that apply.  A Google data center  Google’s employees’ laptops  The Gmail source code  The Google name  Google’s search algorithm  Google’s headquarters office Which of the following assets that you might encounter as an acquisition professional are intellectual property (IP)? Select all that apply.  A hardware prototype developed on contract  Unique support equipment developed on contract for a weapons system  Design drawings for a new weapons system  Contractually required financial reports for a large logistics contract  Command and control software source code developed on contract DoD is procuring a custom communications module and is requiring the delivery of various technical data, computer software, and other information in the development contract. The contractor has both copyrighted materials and trade secrets tied up in this module and related information. Which of the following deliverable assets are intellectual property? Select all that apply.  Communications module parts list  Command and control software user manuals  Detailed manufacturing or process data  Operation and installation instructions for the communications module  Command and control software code  Design drawings  Training materials for operators MegaGlobalCorp is a technology company that holds thousands of patents, has created hundreds of copyrighted designs and software programs, and has trademarked multiple product names and its own brand. MegaGlobalCorp has tens of thousands of large and small business clients, many of whom are on long-term contracts. When the company reached an annual revenue of $100 million, the founder began receiving offers from competitors to buy MegaGlobalCorp. After 15 years in business,s when the company reached $500 million in revenue, the founder sold the company to MegaSoft for $10 billion. Which of the following factors would trigger an intellectual property valuation?  The founder began receiving offers from competitors to buy MegaGlobalCorp  The company holds thousands of patents, has hundreds of copyrights works, and has multiple registered trademarks  The company has over 10,000 clients, many of whom are on long-term contracts  The company reached an annual revenue of $100 million

Match each commercial IP valuation approach with its description. Items Descriptions Market A process to establish a fair market value for the asset based on market transactions for similar IP assets under comparable circumstance Cost An approach to establish the value of an IP asset based on the estimated cost of replacing or the actual cost of reproducing the asset Income The approach that attempts to estimate the future profit that will be generated by the IP asset in present day dollars XDefGobal (XDG) is bidding on a DoD contract that requires delivery of a technical data package and that the awardee grant government purpose rights in that intellectual property (IP). Par of XDG’s solution is a proprietary command and control software application with both federal and commercial customers. XDG has the following data to use in its IP valuation:  Estimate of the direct and indirect costs the government is likely to incur to reproduce the software application  Income history from the last five years the software has been commercially available  Income history from the two existing DoD contracts currently using the software application as part of the solution  Projected income for the software application for the next five years  Present value discount rate Which of the following valuation approaches are viable in this scenario? Select all that apply.  Cost  Market  Income Hadley-Wood, Incorporated (HWI) uses a secret manufacturing process (trade secret) for its communications arrays that significantly improves efficiency and quality over its competitors’ processes. DoD is looking to recompete the production of one of the HWI’s cutting edge communication arrays and is seeking government purpose rights to the technical data for the component. HWI has the following to use in its intellectual property (IP) valuation.  Estimate of the direct and indirect costs the government is likely to incur to replace the manufacturing process  An estimate of the percentage of HWI’s profit margin generated by the process  An estimate of the functional and physical obsolescence that currently exists in the process Which of the following valuation approaches are viable in this scenario? Select all that apply?  Cost  Market  Income Gorman Defense Company GDC) is bidding on a DoD contract that requires delivery of a technical data package and that the awardee grant the government a special license that would permit DoD – but not civilian agencies – to compete sustainment of the radar system. GDC’s solution includes its latest and greatest radar technology, which has one additional federal user as well as numerous commercial customers, even though it’s only been available for a little under three

years. GDC knows that the radar market is very competitive, and that there are numerous viable alternatives available. They also know that their radar technology is currently superior to its competition in a few key ways, and that their window to take advantage of that competitive edge is fleeting. GDC has the following data to use in its intellectual property (IP) valuation:  Estimate of the direct and indirect costs the government is likely to incur to replace the radar  Income history for the radar technology for the past three years  Income history for the radar technology from one existing DoD contract  Projected income for the radar technology over the next 20 years  Present value discount rate  Two comparable market transactions from the last five years for other radar technologies Which of the following valuation approaches are viable in this scenario? Select all that apply?  Cost  Market  Income DoD has released a Request for Proposal (RFP) for development of the next generation of unmanned aerial vehicles (UAVs), tentatively called Specter. Based on lessons learned from other UAV programs, the RFP will require the delivery of a technical data package (TDP), and the rights to use the TDP, including the source code for all command, control, and communications software. DoD is seeking the level of license rights necessary to competitively award future contracts for production and maintenance. So far, the program office has had contact with half dozen potential offerors. The Defense Aeronautics Corporation (DAC) is developing its response to the Specter RFP. As part of its proposal, DAC needs to estimate the value of 1) its cutting-edge recharge-in-flight technology (trade secret) and 2) its popular Safe Flight software system (copyright, patent). Both were developed with substantial research and development (R&D) investments funded at private expense and have numerous commercial clients. DAC was able to find data on two market transactions for similar software applications, but so far no market comparable for recharge-in-flight technology. DAC was able to estimate the direct and indirect costs the government would incur to replace both assets. And, for both assets, DAC has three years of income history, 10 years of income projections, and the present value discount rate. Which of the following approaches can DAC use in this situation to estimate the value of these IP assets?  Cost and market  Cost, market (software only), and income  Cost, market, and income  Cost and income

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

DAC was able to use all three approaches to estimate the value of its copyrights, patented Safe Flight software. The cost approach produced an estimate of $19 million. The market approach produced an estimate of $250 million. The income approach produced an estimate of $310 million. Based on DAC’s assessment of the opportunity and DoD’s estimated budget of $2 billion, DAC does not believe that DoD will be willing to pay $310 million for the application. Based on what you know, which of the following is the most likely approach DAC will take when including the IP valuation in its proposal?  DAC will start with the market approach estimate of $250 million, and adjust it based on what the market will bear  DAC will use the cost approach estimate of $19 million, based on the assumption that DoD will not be willing to pay more than the cost to replace the software  DAC will use the income approach estimate of $310 million, wanting to recover all of their projected income In additional to DAC’s proposal, DoD received proposals from five other offerors, including Wales-Joseph, Inc. (WJI). WJI’s technical proposal is superior, but their proposed contract price exceeds the independent government cost estimate the program put together by 20%. WJI’s cost breakdown does include a line item for IP, but it’s a top-level figure with no explanation. Which of the following questions should DoD ask WJI during negotiations? Select all that apply.  What would be the technical impact of reducing your cost estimate by 20%?  What IP assets are included in this valuation?  What approach did you use to reach this IP valuation opinion?  What supporting data did you sue to reach this opinion? The Army would like to transition the product support strategy for maintaining a fleet of Armored Personnel Carriers (APCs) from contractor logistics support to organic maintenance. The original equipment manufacturer (OEM) is currently executing the second to last year of a five-year, $356 million product support contract that gives them near total responsibility for the logistics support of the APC. Currently, the 1,600 vehicles within the fleet are fielded in contingency environments with high operational tempo. The fielding units can do minimal basic field-level maintenance, but when it comes to most failures they must pull the failed component out of the vehicle and send it to a contractor depot for repair. The contractor also handles all overhauls and manages the supply support for the vehicle. By far the most common components that fail are the engine and the communications array. The Army certainly has personnel that are capable of maintaining similar components from other systems, and being able to repair those components in the field would improve readiness. The program office approached the OEM and asked them what it would cost to provide DoD with the technical data package (TDP) and level of license rights needed to be able to conduct repairs organically. DoD wants the design specifications, the parts list, the software code, etc., for the APC so that the program office has more flexibility and control over product support going forward. The OEM needs to estimate the value of its intellectual property, which includes some trade secrets (production and overhaul processes) and copyrighted assets (communications software, design drawings, etc.). The OEM has licensed the software to other federal and commercial clients. The OEM has estimated the direct and indirect costs the government would incur to replace the IP assets, 10 years of product support revenue history, 20 years of projected income data, and the present value discount rate, but no comparable market transactions. Assume this particular APC is suitable only for DoD, i.e., DoD is a niche market for APCs. Which of the following approaches can the OEM use in this situation to estimate the value of these IP assets?

 Cost, market, and income  Cost and market  Cost and income  Cost only The OEM was able to use both the cost and income approaches to estimate the value of its OP assets. The cost approach produced an estimate of $120 million. The income approach produced an estimate of $2 billion. The programs’ life cycle cost estimate is $8 billion. Based on what you know, which of the following is the most likely approach the OEM will take when including the IP valuation in its proposal?  The OEM will use the cost approach estimate of $120 million, based on the assumption that DoD will not be willing to pay more than the cost to replace the APC  The OEM will start with the income approach estimate of $2 billion, and adjust it based on what the market will bear  The OEM will use the income approach estimate of $2 billion, wanting to recover all of their projected income

CLM 002 - KRQ

Related Documents