An internal audit of your company’s intellectual property assets is something like taking inventory – but with a strategic objective.

Inventorying IP isn’t like counting how many widgets you have sitting in your warehouse (so you know when it’s time to order more). It’s more like a check-up or a report card so you can determine your business’s strengths and weaknesses and think about how you can do better.

Types of IP

Most IP falls into one of the following categories:

Patents and patent applications: for machines/devices, tools, software, business methods, new plant species, bioengineered animals (like the Harvard mouse), formulations, and improvements to all of the above

Design patents and applications: for the physical appearance of an object (like the rounded corners on the original iPhone)

Copyrights: for works of authorship, including software, publications, website contents, marketing materials, etc.

Trademarks: for words, logos, colors, and even shapes and smells used to identify the origin of products and services

Trade Secrets: financial, business, technical, engineering, or other information, including plans, methods, processes, formulas, recipes, etc. that confer economic advantages and which the company has made efforts to keep confidential

Mask Work Rights: for mask works that are fixed in semiconductor chips

Most companies have some or all of these IP rights, but many don’t really understand what they have, how best to protect their rights, and what their rights are worth.

Inventory

An IP audit can be a major undertaking, especially if a company is large and has many types and items of IP spread over several divisions.

The first step is to make the business case for why you need the audit: to maximize value from the company’s IP investment and to mitigate risk. This business case then can be used to obtain buy-in from the relevant stakeholders.

The company will need to use some kind of database to record the details about its IP inventory. This type of database can be created in-house or special software tools can be licensed from companies like Anaqua.

Then the company will need a plan and schedule for performing the audit.

An IP audit will typically involve steps like:

• Listing all the company’s patents and patent applications, with information about whether they’re being used in products/services or not, which product/service lines they’re part of, when they were filed, when they expire, whether they’re being licensed, and how much revenue they’re producing.
• Listing all the company’s registered trademarks and service marks, noting which products/services they apply to, whether they’re in active use, and whether they’re being licensed and for how much.
• Determining what software the company is using and what was created in-house and what is being licensed from third-parties. Making sure that all software used in the business (including on bring-your-own devices) is legal, up-to-date, and properly licensed.
• Reviewing which trade secrets are important to the company and what steps are being taken to protect them.

Protection

Once a company knows what IP it owns, it can take better steps to protect it. For example,

• Are inventors within the company keeping good patent logs, and is the company filing patent applications in a timely manner?
• Has the company registered the copyrights for its home-built software, website content, and marketing materials, so it can act quickly against infringers?
• Is the company using appropriate physical and legal protections (including NDAs for all employees and contractors) to protect its trade secrets?
• Is the company on the lookout for pirate products that may be costing it sales and hurting its brand?
• If the company licenses its IP to others, does it audit the licensees regularly to make sure license fees and royalties are being paid properly?

Risk Reduction

An IP audit can uncover risk factors – like the presence of unlicensed software on the company’s computers. Identifying these risks can allow the company to mitigate them, potentially avoiding expensive litigation.

Ideally, an IP audit should be conducted once a year. But doing any IP audit is better than remaining in the dark about a company’s IP assets.

Just like the haiku above, we like to keep our posts short and sweet. Hopefully, you found this bite-sized information helpful. If you would like more information, please do not hesitate to contact us here.