Why is Intellectual Property Audit necessary?
While some businesses have complex systems and processes to identify, protect, and manage intellectual property assets, surprisingly, some companies do not have such systems in place. Some businesses with intellectual property management systems capable of registration (e.g., patentable inventions, trademark registrable) face difficulties when their talented employees leave the company, taking their valuable secrets with them. Even for businesses “aware of intellectual property,” these systems need periodic review, and employees need training or education on how to effectively utilize intellectual property assets within their business. The issues to consider in conducting an intellectual property audit may include:
- Ownership of intellectual property rights: Has your company properly protected all intellectual property rights? Are there patents, industrial designs, trademarks, copyrights, or related rights that could be better protected? Were the designs or inventions created by your employees or obtained through independent contractor agreements? If not, do you have the right to use them?
- Due diligence at the highest level: Does your company own or have licenses to use all the technologies necessary for its products? Does your company infringe or have the potential to infringe on the intellectual property rights of others?
- Licensing: Is your company making effective use of intellectual property assets? Do you license intellectual property rights to other companies? Are you receiving fair compensation for these licenses?
- Enforcement: Is your intellectual property being infringed by others? Are you taking necessary actions to prevent infringement?
Different Types of Intellectual Property Audits
An intellectual property audit involves a thorough examination of the specific needs of a business but is generally used to identify existing intellectual property assets, ensure proper protection of these assets (e.g., documenting technical know-how, if any), and streamline or review the intellectual property management systems from creation to the expiration of protection.
Examples of different types of intellectual property audits include:
- Start-ups typically want appropriate protection for their core technologies and/or intellectual assets. Setting up systems to identify intellectual property assets during the early stages of the business can increase the profitability of these assets.
- Businesses involved in mergers, acquisitions, or investments in other businesses often focus on valuing the target company’s assets, including evaluating the value of intellectual property rights. This is also an important consideration for businesses considering selling important intellectual property assets.
- Companies engaged in export need to focus on audits to ensure effective intellectual property protection in all relevant markets. This includes identifying opportunities to establish strategic relationships related to intellectual property ownership, co-marketing, production link agreements, licensing, franchise agreements, and, in some cases, selling intellectual property assets.
