How to use an IP Audit

WIPO

Author Emanuel Berrod Licence CC BY-SA 4.0

 

Jane Lambert

The World Intellectual Property Organization ("WIPO") describes an intellectual property audit as a tool for identifying "potential IP assets", that is to say, protectable intellectual assets. An IP audit helps to uncover unused or under-utilized assets, determine ownership of those assets and warn against possible conflicts with intellectual property owners or potential infringers. 

Information on the types of IP audit, preparing for such an audit and carrying it out is available on the Intellectual Property page of the WIPO website.  More detailed information can be found in Module 10 of IP Panorama.   The WIPO categorized IP audits as follows:

• "General-purpose This is broadest type of IP audit, used by new companies or those considering implementing new IP policies, standards or procedures. It is also suitable for companies implementing new marketing approaches, directions, or major reorganizations."
• Event-driven This type of IP audit is also known as "IP due diligence". It is used to assess the value and risk of a company's IP assets. The event-driven audit is often utilized: 
• in the context of mergers/acquisitions and joint ventures; 
• before entering into a financial transaction involving IP, such as an initial public offering; 
• when launching a new product or service; 
• when considering IP licensing; and in cases of bankruptcy and layoffs."
• Limited-purpose This is the IP audit with the narrowest scope. It is situational in nature and typically used to justify a legal position or the valuation of a particular IP asset. It can also be applied in the context of: 
• personnel turnover; 
• foreign IP filings; 
• before engaging in e-commerce;
• changes in IP law and practice;
• 'clean room' procedures (seeking to avoid the infringement of third-party copyright material); and 
• preparing for litigation."

The WIPO states:

"Ideally an audit should be carried out by professional IP auditors, but often a preliminary audit can be done in-house, within your company."

The article does not explain what is meant by "professional IP auditors" because arrangements will vary from country to country. In the United Kingdom, the term probably includes patent and trade mark attorneys and possibly solicitors with expertise in IP.  However, IP is too important to be left to specialist lawyers and patent and trade mark attorneys.   Every entrepreneur and manager should have sufficient knowledge of IP to identify threats to conduct a limited purpose audit.  

Like other tools, an IP audit can be misused.  The identification of a patentable invention does not mean that a patent must always be sought.  Considerable resources may be required to protect the invention in the countries where it may be marketed as well as those in which suppliers of competing products are located.  Unless the development, production, marketing and distribution of the invention are already featured in or can be incorporated into the company's business plan. there are likely to be better uses for such resources.

An IP audit can be put to better use when devising and monitoring the implementation of an intellectual property strategy.  As I wrote in Putting IP at the Heart of your Business Plan 2 Jan 2015, the drawing up of a business plan is the best time for devising an IP strategy.  A "general purpose" IP audit at this stage should identify the intellectual assets to be protected, the options for protecting them, the probable difficulties in obtaining such protection and the resources that will be required to overcome such difficulties.  As circumstances may change over time it is important to keep the implementation of the plan under constant review.  That can be achieved by a "limited purpose" IP audit which in some cases can be conducted in-house.

This is a good time for businesses to consider an IP audit because generous public funding is available for that purpose until March 2022 (see UK IPO launches new IP support scheme 26 Aug 2021 CITMA website). Anyone wishing to discuss this article may call me on 020 7404 5252 or send me a message through my contact form.