The intellectual property called Right of Publicity (RP), is also known as "Name and Likeness" "Persona," and "Personality Rights." Any and all of these terms encompass the right of an individual to control the commercial use of his name, image, likeness, or any aspect of one's identity. Usually considered a property right, it can survive one's death, depending upon the jurisdiction.
The most common notion of personality rights is the individual's motivation to commercialize sales or branding of a product or service. This doctrine also protects one's privacy and use of his name only with his permission. The right of publicity is not protected by Federal Law, and only recognized by about 60% the states. The most extensive coverage is provided by California, which includes name, voice, signature, photograph or likeness. The right is also divisible, such that portions can be assigned to others, while other parts are retained.
For valuation purposes, the methodologies are based on cash flows from use of the right(s) and actual market licensing transactions. The cost approach is not applicable, since the cost to recreate the IP is impossible to calculate.
The best approach is to calculate the present value of the projected income stream that can be received from use of the rights. These income streams could involve existing contracts, licensing and sponsorship agreements, as well as products clearly branded with the individual's name and likeness. Thorough analysis of the market and consumer trends is critical, as well as ascertaining the realistic rate of return and length of anticipated streams. The valuator must determine appropriate royalty rates based upon the particular celebrity's popularity and portion of the rights being commercialized.
Some of the significant aspects of the market research use summarized as follows:
- Was the celebrity more revered during his life or post death?
- How have prior persona rights of others been used, and how do these compare to existing or known licensing/contractual agreements?
- What is revealed in filed or settled lawsuits and the amount of the monetary judgments in the form of profits disgorged and further damages?
- Consumer acceptance of the person's character and how the personality rights are applied to products and services.
Numerous assumptions are required to build a credible case and valuation. Use of the most accurate market facts is essential. The ultimate test of reasonableness is the IRR, or internal rate return for the right of publicity.