INTELLECTUAL PROPERTY AUDIT

An intellectual property audit is a thorough examination of a company's IP assets, as well as the risks and possibilities that come with them. IP audits can aid in the assessment, preservation, and enhancement of IP; the correction of defects in IP rights; the utilisation of unused IP; the identification of risks that a company's products or services infringe on another's IP; and the implementation of best practises for IP asset management.

INTELLECTUAL PROPERTY AUDIT

WHAT IS AN INTELLECTUAL PROPERTY AUDIT?

An intellectual property audit is a thorough examination of a company's IP assets, as well as the risks and possibilities that come with them. IP audits can aid in the assessment, preservation, and enhancement of IP; the correction of defects in IP rights; the utilisation of unused IP; the identification of risks that a company's products or services infringe on another's IP; and the implementation of best practises for IP asset management.

IP audits are often undertaken by a lawyer or law firm because IP rights are created and defined by law. The lawyer is frequently new to the audited company and has a wide range of experience with various sorts of IP and IP valuation issues. The company assigns a point person to deal with the lawyer—ideally, someone who is familiar with IP principles as well as technical aspects of the company's operations. When the monetary value of an IP portfolio is a major problem, the team should include an accountant or economist who has dealt with IP valuation concerns before.

It may be beneficial for the lawyer to begin by giving management and key staff a general review of IP and finding ways to preserve and enhance a company's existing IP rights. Any key personnel who develop or are familiar with the company's technology are also encouraged to participate.

WHAT ARE THE BENEFITS OF IP AUDITS?

Although intellectual property (IP) sometimes gets a bad rap, it is protected by the United States Constitution, is widely used by American enterprises of all kinds, and is here to stay. Patent protection is on the rise, with a record number of new patents in the United States (about 300,000) predicted in 2013. The historic America Invents Act, which features measures for expediting the patenting process and improving the integrity of U.S. patents, went into effect on March 16, 2013. A deal passed into law in December 2012 makes it easier for American businesses to seek design patents around the world. In June 2013, a bill was filed in Congress that would strengthen federal protection against trade secret theft. Companies that understand their intellectual property and how to use it should expect to gain a competitive advantage over those who do not, according to US law.

IP AUDITING TYPES

The scope and extent of the audit would differ depending on the audit's goal. An IP audit could include:

  • Auditing for general purposes - An audit may be conducted by an enterprise on its own to determine the validity of its IP and to check the effectiveness of its IP management system; for example, an audit may be conducted by an enterprise on its own to determine the validity of its IP and to check the effectiveness of its IP management system. Another example is when the law changes (such as the recent amendments to copyright laws or data protection laws in India), the company conducts an IP audit to ensure that its documents and processes are up–to–date and in compliance with applicable laws; or when the law changes (such as the recent amendments to copyright laws or data protection laws in India), the company conducts an IP audit to ensure that its documents and processes are up–to–date and in compliance with applicable laws; or when the law changes (such as the recent amendment
  • Audit for a specific purpose - It is carried out to identify specific issues; for example, a production house interested in obtaining the rights to a book in order to adapt the book into a cinematographic film may carry out a limited diligence to determine the validity of the title of the one granting the rights. Similarly, a corporation interested in purchasing a patented idea may undertake due diligence on the patent owner to guarantee that they possess the patent and may legally assign it.

Furthermore, an IP audit can be either:

  • An internal audit, which is undertaken by internal resources; or
  • An external audit, which is conducted by third party resources in conjunction with internal resources, depending on the circumstances.

WHAT IS THE PURPOSE OF THE AUDIT?

The IP Audit follows the following steps in the SWOT analysis process:

  1. S – Strength: Determine the IP owner's strongest and safest places. This might include everything from the product's goodwill to well-drafted legal and comprehensive protection, which would be the owner's most valuable asset.
  2. W - Weakness: One of the main goals of the IP Audit is to find weak places and loose ends that could lead to future legal challenges. The audit will assist the owner in planning ahead of time and devising a full-proof procedure to overcome such irregularities.
  3. O – Opportunities: An IP audit may also be seen of as a preparation that the owner undertakes in order to examine the current position before taking any further action. Before starting with actions to use their IP to earn cash, the owner of an IP could take such preparatory measures as licencing, technology transfer, and leasing.
  4. T – Threats: Because intangible rights are weak and frail, they are always unprotected if they are not adequately protected and enforced by the law. Given the highly digital and technologically advanced competitive market, risks to IP have been on the rise, and the IP Audit helps the owner identify and track the source of any potential dispute, as well as take appropriate measures to avoid it.

IP AUDIT METHODOLOGY:

In common usage, the term "audit" refers to a thorough, formal review and verification of an organization's finances and processes in order to gain a better understanding of its financial status and market standing. An audit is followed by a report on the findings of the due diligence, which the company can utilise to prepare for future business growth.

In order to conduct an IP audit, it is critical to first identify and determine the audit's desired purpose. The main focus of developing an action plan would be determined by the following factors:

  1. The company's time in the market.
  2.  Its geographic presence and the jurisdictions in which it operates.
  3. The company's size and the number of subsidiaries involved
  4. Establishing a goal strategy to achieve milestones and fulfil critical dates in order to fully use the company's intellectual property.

After the aforementioned guidelines have been established, it is necessary to obtain the required information relating to the company's IP, which can be broken down into the following criteria:

  1. Gathering data on the company's global IP presence in the form of various filings and existing registrations;
  2. Contractual, licencing, and R&D agreements that the corporation may have entered into in regard to its existing IP.
  3. The classification of existing intellectual property and an understanding of the future prospects for its development;
  4. Legal encumbrances, involvements, and duties of the entire company that may have an impact on the company's profile and intellectual property.

 

CONCLUSION

 

The passage of time has made us recognise that intangible assets have gradually become a key portion of the knowledge economy's economic value. Recognizing the scope for IP and capitalising on its true value is the most critical component for a long-term market presence.

Though IP protection is available all around the world in various forms such as registrations, filings, licencing, and barring from abuse, most owners fail to recognise the worth of their assets and fail to protect them. Being caught off guard by any market entity might cause havoc, both monetarily and in terms of goodwill, which would be extremely destructive to the organization's future.

Given the concept of the global village and the advancement of information technology, the world has truly shrunk in size, necessitating an increase in the demand for protection. It is just as crucial to build an IP asset as it is to protect its ownership and administration. It's past time for businesses to recognise the value of these rights and put them to good use.

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BY- SRIJA PURIMETLA