Uncovering IP Risks and Potential: IP Audit

Uncovering IP Risks and Potential: IP AuditIP can drive value for your business, from delivering competitive advantages to creating revenue streams. Knowing what IP you have and its strategic importance to your business is an important step in realizing the potential of these assets. An IP audit is a first step towards making these assets work for you.
While using IP strategically can have tremendous benefits for your business, using the IP of others without permission can have devastating consequences. An IP audit can also reveal vulnerabilities for your business, that could ultimately lead to pulling your offerings from the market or paying damages to a third party.
You can use WIPO’s IP Diagnostic tool to support the process. At some stage, a professional support can be helpful to reveal hidden risks and potential. You can use the information you learn to build an IP strategy, create new revenue streams, or reduce risk to your business.

       (Image: vladwel/Getty Images)
      
What you learn in an IP auditAn IP audit reviews the IP owned and used by your business. During an audit you can:
Identify existing and potential IP assets
Identify coverage and gaps in protecting your IP assets
Make sure you actually own the IP assets that are strategic to your business
Uncover unused assets that cost your business money
Identify under-utilized assets that can help you generate revenue
Identify IP assets of third parties you might be using that create risk for your business
Five moments to think about an IP audit
      
       1. When setting business strategy or reorganizing
      
      Whether your business is at its early stages or just changed course, reviewing what you own and your IP related policies helps make sure you can achieve your commercial objectives.

       2. Before working with investors and lenders
      
      These audits focus on what IP you use, whether you can prove you own it, and what kinds of IP risks your business faces. Many lenders will require this kind of due diligence before they hand over any money.

       3. Before working with acquirers, or partners
      
      Similar to working with investors and lenders, this type of audit may also focus on the transferability of agreements to a new owner or entity. Doing this analysis early can help you avoid problems that can derail your acquisition or partnership.

       4. Looking to cut costs or build revenue
      
       Many registered IP assets require regular payment to keep them alive. If these assets are no longer performing for your business, an audit can identify where you can save money. This gives you options to either stop paying renewal fees or monetize non-core business assets.
      
       5. Preparing for licensing or litigation
      
      These audits will do a deep dive into the ownership of specific assets, their validity, and how they are being used in your business.

Getting ready for an IP auditKeeping in mind the purpose of the IP audit, you can start the process by gathering information, such as:
Your company’s IP policies and strategies if they exist
Standard agreements that may have an IP component, like employment and non-disclosure agreements and supplier arrangements
A list of key employees creating IP assets and their employment agreements
A list of personnel managing IP assets
A list of IP assets you own and related documentation, including: 
      registered assets like copyrights, domain names, industrial designs, patents, utility models and trademarks
other unregistered assets like software, trade secrets, and unregistered copyrights
Contracts that might have IP provisions, like suppliers, licenses to IP and software, customer and partnership agreements, research arrangements, etc.
A description of any IP related disputes
Carrying out an IP auditDepending on the purpose of the IP audit and available budget, some of the following analyses may take place:

       Inventory
      
       Identify how each asset is being used in your business and if registered, make sure it’s still valid. Many registered IP assets need to be renewed regularly to remain in force.
      
       Ownership and other rights
      
      Check if you can prove you own your key assets. Even if you have an agreement in place, you still may need separate documentation to be completed at the relevant IP office.
Identify who else has the right to use your assets and on what terms. They may be jointly owned or licensed to someone else. Also identify if someone else has a claim to these assets, like an investor or a lender.

       Who’s using your IP?
      
       Check if someone else is using your IP without your permission.
      
       Third party IP
      
       Determine if your business uses the IP rights of others. If so, identify whether you need permission from the IP owner to use it.
      
       IP Valuation
      
       Analyze the value of key IP assets.
      
       Policy review
      
      An analysis of IP related policies such as:
IP strategy
Onboarding and exit of employees
Protection of confidential information
How IP rights are: 
         secured
considered in a product launch
handled in commercial arrangements (customer and supplier contracts, partnerships)

After an IP auditAn IP audit helps you understand your company’s IP assets and their potential. It should also identify IP related risks. But the audit is only the first step. Following the audit, make sure your approach to IP matches your company’s commercial objectives.
Remember, IP can change in value as technology and business contexts change. Conducting regular IP audits play an important role in making these assets work for your business.