Intellectual Property Appraisal

The market value of any portion of these rare and singular conversations, a collection of 160 hours of interviews done by a German-speaking American in the German Democratic Republic during the late 1980s and in the former GDR following the reunification of 1991, are somewhat rare in that the interviewer received permission to conduct them in the GDR prior to the fall of the Berlin Wall. These interviews are with “ordinary” people, for example, with students and a librarian, rather than with prominent personalities and as such are an interesting and useful resource for academic specialists and others studying life in the eastern part of Germany before and after the fall of the Berlin Wall.

In establishing a supportable marketing approach to valuation I reviewed the Getty library film clips and while searching “Post Berlin Wall Germany” a number of commercial use film clips were brought to the table. The film clip that demonstrated content with the closest similarity was a group walking and talking by a blossoming tree in front of the wall in Brandenburg, Germany. The price for limited rights to use this clip for use in a movie or documentary is $77.16/sec. or $4,629/ min. This clip is annotated with, “Use in one entertainment project; does not include trailers. This license includes the right to distribute the project in its final form in all media now known or hereafter devised throughout the world in perpetuity. For documentary films (opening title, body, closing sequence)”

In viewing the income approach method it is obvious that the archive being valued would not be used for filming or commercial purposes but would be given to a museum who would charge a more reasonable rate for its use in research and study. The particular museum involved plans to charge a reasonable rate for research use and a $300 per min. charge for limited rights to use the material for documentary or syllabus purposes.

As in other cases of similar ilk, given the relative scarcity of benchmarks for evaluating comparable ethnographic nontheatrical films, the appraiser has chosen to include in the evaluation of these filmed interviews an understanding of the Library of Congress’s review of evaluative methods for motion picture film dated March 19, 1970. The committee that conducted the review stated that “in the absence of an actual documented market, the method of evaluation combining both qualitative and quantitative elements cannot be avoided.”

The main thrust by the appraiser in valuing this material makes use of the income approach. Smith and Parr note in “Valuation of Intellectual Property and Intangible Assets” that in discussing the income approach for tangible assets, “fair market value is defined as the present value of the future economic benefits of ownership”. This approach is appropriate when the subject film’s highest and best use can be determined as an object for either being leased, rented or licensed as a business practice by a firm, an institution or an individual who is in the business of leasing or renting images.

FAIR USE

As an aside, an issue of value can arise when an author or filmmaker, in addition to their own creative production, incorporates the intellectual property of others, such as the subject interviews, in order to augment the momentum of their own theme. This addresses “Fair Use” doctrine. Fair use is a limitation and exception to the exclusive right granted by copyright law to the author of a creative work. In United States copyright law, fair use is a doctrine that permits limited use of copyrighted material without acquiring permission from the rights holders. Examples of fair use include commentary, search engines, criticism, parody, news reporting, research, teaching, library archiving and scholarship. It provides for the legal, unlicensed citation or incorporation of copyrighted material in another author’s work under a four-factor balancing test.

In determining whether the use made of a work in any particular case is a fair use the factors to be considered include, the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

1. the nature of the copyrighted work;
2. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
3. the effect of the use upon the potential market for or value of the copyrighted work.

For this discussion we will only be concerned with the first factor which asks whether the use in question helps fulfill the intention of copyright law to stimulate creativity for the enrichment of the general public, or whether it aims to only “supersede the objects” of the original for reasons of personal profit. To justify the use as fair it must be demonstrated that the material either advances knowledge or the progress of the arts through the addition of something new. A key consideration is the extent to which the use is interpreted as transformative, In United States copyright law, transformation is a possible justification that the use of a copyrighted work may qualify as fair use, i.e., that a certain use of a work does not infringe on the holder’s copyright due to the public interest in the usage. Transformation is an important issue in deciding whether a use meets the first factor of the fair-use test, and is generally critical for determining whether a use is in fact fair, although no one factor is dispositive.

Addressing the purpose and character of the use, including whether such use is of a commercial nature, the inquiry focuses on whether the new work merely supersedes the objects of the original creation, or whether and to what extent it is controversially “transformative,” altering the original with new expression, meaning, or message. The more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.

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