In today’s faced-paced economy and highly-competitive working environment, Intellectual Property (IP) is indeed an essential part of every business company’s bottom line. It consists of a variety of forms, including a trademark corresponding to names, logos, signs, and symbols that identify and distinguish the goods and services of one company from another; a patent corresponding to methods, features, and processes that make products or innovations more desirable; a copyright corresponding to creative works such as product manuals and guides, artwork, audio-visual works, software, to name a few; and an industrial design corresponding to the ornamentation and appearance of a specific product. Many years ago, brands and businesses usually overlooked the value of IP; however, in the present era, they have typically recognized the utmost importance of IP in business decisions and transactions, as a result of which, there is an increase in the demand for IP audits. So let us now make ourselves familiar with what are IP audits and why they are essential for effective IP management.
What do we understand by the term IP Audit?
An IP Audit refers to a systematic review of a business company’s valuable IP assets, along with related opportunities and risks. IP audits offer immense help in assessing, preserving, and enhancing IP; correcting defects in different forms of IP; putting unused IP to work; identifying risks corresponding to a company’s offerings infringing on another company’s IP, and implementing the most effective practices for IP management. Moreover, a thorough and systematic IP audit not only reviews a business company’s valuable IP assets but also focuses on its IP-related policies, procedures, agreements, and competitors’ IP.
As IP rights are defined and designed by law, IP audits are usually conducted by an IP law firm. Such firms hold a broad range of experience in dealing with various forms of IP and IP valuation matters. If the monetary value of a company’s IP portfolio is of chief concern, then the team may also look forward to appointing an economist or accountant who has experience dealing with issues if IP valuation. Business companies having a sophisticated knowledge of IP can initiate discussions with a survey of their IP portfolio and competitive position in the business environment, followed by a more focused analysis of IP issues and concerns. The all-inclusive and most comprehensive IP audits encompass estimates of IP’s monetary value, along with detailed recommendations and protocols corresponding to dealing with the IP assets. IP audits can either be general in scope or can be related to a specific event or form of IP. General-purpose IP audits help significantly to both the startups and established companies in not only evaluating and safeguarding their IP assets but also identifying opportunities, development needs, and risks.
Importance of IP Audits
IP audits can help business companies and organizations lead towards the ultimate path of success in the following ways:
1. IP Audits help in identifying what IP is owned –
One can never deny the fact that every successful business is well-managed in all aspects. IP is undoubtedly a critical part of all the business companies, due to which, it requires adequate management. If a business company is not aware of the IP assets it owns, it can never manage that property effectively and protect it from any loss or damage. That’s where conducting an IP audit proves to be exceedingly beneficial as it informs a business company about the IP assets it owns so that the company can make decisions accordingly corresponding to Intellectual Property Protection, development, licensing, and exploitation. Additionally, an IP audit may also reveal defects in chains of title and further outline steps to rectify them.
2. IP Audits help in identifying new opportunities to profit from IP –
IP audits hold immense potential for bringing in new commercial opportunities for brands and businesses in both domestic and foreign markets via IP licenses. They also offer fruitful outcomes in monitoring the IP of competitors in the marketplace. An additional benefit of conducting an IP audit lies in the fact that it enables innovators, decision-makers, and marketers to protect the IP opportunities proactively way before they are lost.
3. IP Audits help in preventing costly disputes –
Without any second thoughts, IP litigation is both complex and expensive, and the sad truth about the same is that startups and small business companies must at times forgo litigation, despite having winnable and meritorious positions. An IP audit can successfully offer assistance to companies in foreseeing possible disputes and further planning effective avoidance strategies. It can also identify weaknesses in the audited company’s Intellectual Property Rights (IPRs), which can then be efficiently addressed with timely action.
4. IP Audits help in facilitating and optimizing business transactions –
In the present digital age, IP audits have emerged more prominently in business deals. By having a complete understanding of a business company’s IP assets and its estimated value, an IP audit equips the business owners to deal with opportunities that may arise at some point or the other, such as a new sales or expansion opportunity requiring financing, or a third party offer to buy the company.