Intellectual Property Audit: General Guide

Introduction

Intellectual property (IP) refers to intangible assets such as patents, trademarks, trade secrets and copyrights. These assets are valuable to businesses as they provide a competitive advantage, help generate revenue and enhance brand recognition. However, with the fast-paced nature of innovation and business growth, it is important to conduct IP audits periodically to ensure that these intangible assets are adequately protected.

IP audits can help identify IP assets and evaluate their value. This information can be used to identify opportunities for monetizing these assets. IP audits can also help identify weaknesses in IP protection strategies. By conducting an IP audit, you can identify areas where improvements can be made. This can include identifying gaps in the IP portfolio, reviewing IP policies and procedures and assessing employee training and awareness of IP issues.

Moreover, IP audits can help companies prepare for potential mergers or acquisitions. Companies that are looking to acquire or merge with another company will want to conduct due diligence to assess the target company’s IP assets and liabilities. By conducting regular IP audits, companies can identify potential issues that may arise during the due diligence process, allowing them to address those issues before they become a problem.

An IP audit is a thorough review of a company’s IP assets and related agreements. It is a prudent practice for companies to conduct periodic IP audits to help safeguard substantial investments in intangible assets.

An IP audit can be tailored to fit the specific needs of the company. This guide and checklist will serve as a starting point to help you understand best practices for conducting an IP audit.

Identify the IP Assets

The first step in any IP audit is identifying all of the company’s IP assets, including patents, trademarks, copyrights, trade secrets and any other proprietary information. This involves a review of all internal and external documentation related to IP.

Review IP Agreements

The next step is to review all agreements related to the company’s IP assets, including license agreements, joint development agreements and collaboration agreements. This helps ensure that the company is complying with all contractual obligations and that its IP is properly protected.

Evaluate the Strength of the IP Portfolio

Once the IP assets have been identified, the strength of the portfolio is evaluated. This involves assessing the validity of the patents and trademarks, identifying any gaps in protection and reviewing the competitive landscape to determine if the company’s IP assets provide a competitive advantage.

Determine Potential Infringement

You may also want to review potential infringement of the company’s IP assets by third parties, including competitors, customers and suppliers. Similarly, you may want to review exposure of the company to infringement claims by others. This includes conducting a review of any litigation or disputes related to IP infringement.

Develop an IP Management Strategy

Based on the findings of the audit, the company should develop an IP management strategy that includes recommendations for strengthening the IP portfolio, actively managing the procurement of protection of IP, addressing any gaps in protection and mitigating any potential infringement risks.

Monitor and Update the IP Portfolio

Finally, it is important to monitor and update the IP portfolio on an ongoing basis to ensure that it remains current and relevant in light of changing market conditions and technological advancements.

In summary, conducting an IP audit is important to ensure that valuable IP assets are properly protected and to identify opportunities for strengthening the company’s IP portfolio. By following the steps outlined above, your company can develop an effective IP management strategy that helps to mitigate risk and maximize the value of IP assets. Below you will find a checklist of specific items that we recommend you perform in connection with an IP Audit.

Patents

1. Identify and review all patents owned by the company, including those that have been licensed to third parties.
2. Ensure proper chain of title and recordation of assignments on any patents and patent applications.
3. Verify that all patents are current and have been properly maintained, including payment of maintenance fees.
4. Identify any patents that may have been infringed by third parties, and assess the potential risks and damages associated with such infringement.
5. Review all patent license agreements, and verify that the company and any licensees are in compliance with all contractual obligations.
6. Evaluate the strength of the company’s patent portfolio, including the scope of patent claims, the level of innovation demonstrated and the quality of prosecution.
7. Review the company’s patent filing and prosecution strategy to ensure that it is aligned with the company’s business goals and objectives.
8. Conduct a patent landscape analysis to identify emerging technologies and potential competitors, and adjust the company’s patent strategy accordingly.Assess the overall value of the company’s patent portfolio, and consider whether any patents should be divested or sold.

Trade Secrets

1. Identify all trade secrets related to your business, including formulas, manufacturing processes, product design, business processes and other confidential information not disclosed in a patent application.
2. Review or develop policies and procedures for safeguarding trade secrets, including physical, technical and administrative measures, such as access controls to facilities, encryption of electronic data and monitoring of employee access to sensitive information.
3. Review all agreements related to trade secrets, including nondisclosure agreements, confidentiality agreements and employment agreements.
4. Evaluate the strength of the trade secrets by assessing their value, secrecy and uniqueness, and identifying any potential threats or vulnerabilities specific to the company’s industry.
5. Establish a system for tracking and maintaining records of trade secrets, including the dates of creation, owners and any agreements or licenses.
6. Conduct regular training and education for employees and contractors on the importance of protecting trade secrets and the consequences of misappropriation.
7. Monitor and investigate any potential breaches of trade secret protection, including employee departures, competitor activities and unauthorized access to facilities or information.

Trademarks

1. Identify all trademark registrations owned by the company and determine renewal dates.
2. Review all trademark applications to ensure that they have been properly filed and maintained.
3. Identify any trademarks for goods or services that are not yet registered.
4. Ensure that pertinent trademarks are registered in all countries where the marks are used.
5. Evaluate the strength of the trademarks by reviewing the distinctiveness and likelihood of confusion with other marks.
6. Identify any potential infringement of the company’s trademarks by third parties and determine the appropriate course of action.
7. Review all license agreements related to trademarks and ensure that they are in compliance with all applicable laws and regulations.
8. Determine whether any trademarks have been licensed to third parties and evaluate the terms and conditions of such licenses.
9. Review all trademark assignment agreements to ensure proper execution and recordation.
10. Identify any potential trademark infringements by the company and determine the appropriate course of action.

Copyrights

1. Identify all copyrighted works owned by the company, including software, literature, artwork and other creative works.
2. Review all copyright registrations and ensure that they have been properly filed and maintained.
3. Identify any potential infringement of the company’s copyrights by third parties and determine the appropriate course of action.
4. Review all license agreements related to copyrights and ensure that they are in compliance with all applicable laws and regulations.
5. Determine whether any works have been created by third parties and review the terms and conditions of any applicable license agreements.
6. Review all copyright assignment agreements to ensure proper execution and recordation.
7. Identify any potential copyright infringements by the company and determine the appropriate course of action.

Employee Agreements

1. Ensure that all employees understand their obligations to assign any inventions, patents, trademarks, copyrightable works and other intellectual property to the company.
2. Review all employment agreements for appropriate language regarding IP assignment obligations.
3. Provide training to employees on the importance of protecting and properly assigning intellectual property.
4. Establish a system for tracking and maintaining records of employee inventions and IP assignments.
5. Regularly monitor employee activities to identify potential breaches of IP assignment obligations.
6. Establish policies and procedures for handling employee departures and ensure that all departing employees have fulfilled their IP assignment obligations.
7. Ensure that all IP assignment agreements are properly executed and recorded.

Invention Disclosure Program (If Applicable)

1. Establish clear guidelines and procedures for submitting invention disclosures, including a standard format and submission process.
2. Develop a system for tracking and managing invention disclosures, including a database or other electronic system.
3. Provide regular training and education for employees on the importance of invention disclosures and the process for submitting them.
4. Establish a review process for evaluating invention disclosures, including a review committee or individual designated to review each submission.
5. Establish clear criteria for evaluating the potential commercial value of each invention disclosure, and assign a priority level based on this evaluation.
6. Develop a process for communicating the status of each invention disclosure to the inventor and other stakeholders, including updates on the patent application process or potential licensing opportunities.
7. Establish a policy for providing incentives to inventors who submit valuable inventions, such as bonuses or other rewards.
8. Develop a process for tracking and monitoring the patent application process, including communication with outside patent attorneys or agents.
9. Establish a process for licensing or selling patented inventions to third parties, including identifying potential licensees and negotiating license agreements.
10. Review the effectiveness of the invention disclosure program on a regular basis, including metrics such as the number of disclosures submitted, patents filed and revenue generated from licensing or selling inventions.

Conclusion

Intellectual property is often considered a significant part of any technology company’s value. Periodically reviewing the company’s IP will help ensure that the most value is realized. We would encourage you to reach out to us for assistance in performing an IP audit and establishing policies that may be needed to help your employees provide more value in this regard.

To set up a custom audit for your company, contact us:

972-367-2001 | allen@caglaw.com | 7500 Dallas Pkwy | Suite 300 | Plano, Texas 75024