What is the “income-based” approach for IP valuation?

Minneapolis intellectual property attorney Gary Speier defines the income based approach to IP valuation.

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So the income based approach looks at, for example, a patent that is licensed and it looks at the future royalty revenues that are incurred and it calculates a present value based on that future royalty stream. So it converts maybe 5, 10, 15 years of an income and calculates a present value to it.