Overview
IntroductionIntellectual Property (IP) comprises intangible assets and property derived from the creative and inventive endeavours of people and businesses. IP includes, trademarks, patents, trade secrets, industrial designs, new plant varieties, geographical indications, and any sphere of creativity that exists. IP assets can be leveraged to significantly increase the flow of profit for owners and proprietors, serving as a substantial source of value for creators and owners. Most businesses are unaware of this, at best, limiting their interaction with their owned IP to mere registrations and renewals. IP audits have proven to be a valuable tool for businesses in achieving higher levels of profitability through the effective utilization of their IP assets.
For instance, since 1993, International Business Machines Corporation (IBM) has generated approximately $1 billion USD per year from licensing its non-core technologies, which would have otherwise remained unused.1 Basically, once they had upgraded their technology, they licensed the earlier versions instead of letting them remain idle. Nothing but a comprehensive IP audit policy would have conceived this idea. IP auditing has gained momentum as a strategic exercise that allows companies to maximize the potential of their IP assets. This article explores the definition, framework, significance, and deliverables of IP audits, placing them as important tools for sustainable business development and maximizing the value of a company's IP assets.
Understanding Intellectual Property AuditsAn IP audit is defined as a structured process of identifying, categorising, and evaluating all intellectual property owned, used, or acquired by a company. It involves documenting existing IP rights, their legal status, contractual obligations, enforcement history, and commercial utility. It is an exercise undertaken to take stock of and record all IP assets of a business to evaluate and control risks and apply optimal practices in managing IP assets. This audit will involve taking an inventory of assets and contracts related to those assets to have a wider view of the assets owned by the business, protection measures, and other foreseeable IP needs. Audits can be carried out at any point in a business's lifecycle.
When starting up, businesses can undertake a process that primarily identifies their assets and develop protection strategies. Audits can also be conducted when a business launches a new product or service. New products or services typically involve the engagement of several third parties who assist in their creation and rollout. An audit will be necessary to ensure that all assets are identified and proactively protected. Furthermore, when a business needs investment, sorting out its IP portfolio can significantly increase its chances of success.
