Case Experience 2 – IP Audit at an Indian Company
The case experiences are based on the 120 audits we had performed in India over the last ten years. The audits gave us invaluable insights into the role of IP in business in the Indian context, and we have tried to encapsulate some basic results/learnings at a macro level through these experiences. The names of companies and business details have been consciously avoided to comply with confidentiality covenants and professional obligations.
A large electronic manufacturing services company based in Kerala, requested for an IP Audit. Except for a few trademarks, the company did not protect most of its IP Assets. When the request was made, the company was in the process of getting investment, and wanted to show case it’s IP for the said purpose.
Objective of the IP Audi
The company requested the IP Audit with a single objective in mind:
To create an inventory of IP that may be showcased to potential investors. The activity had to be completed quickly so that appropriate protection measures may be taken before details are sent to investors.
The company’s business profile and its divisions were thoroughly studied before initiation of the IP Audit. The on campus activity was carried out thereafter for a period of five days. The activity included visits to manufacturing and product packaging facilities, and review of all products being made by the company.
On completion of the same, interviews were initiated with personnel working on/for each product. That included Research and Development teams, product groups, support teams, marketing personnel, etc. The interviews were documented, and several other documents and materials with respect to each product were collected.
On review and analysis of the information gathered, the IP Audit team prepared a report that included an IP inventory, policy/process recommendations, recommendations and IP action points, and priority action points.
Though the company provides services, and manufactures products for customers, the auditors discovered that it had several IP Assets that could be protected. The results were as follows:
- More than 80 patentable inventions were identified;
- Hundreds of copyrightable drawings and other materials were uncovered;
- Several trade mark protectable marks were discovered;
- More than 30 designs capable of industrial design protection were identified; and
- Many trade secrets were identified and classified.
Overall, several ideas that could lend business value to the company were found and documented for further business analysis and decision on protection. In addition, recommendations were made for appropriate legal instruments to vest clear IP ownership, process for identification, protection and management of IP in the future, marking and notices with respect to copyrights, trademarks and trade secrets, measures for protecting trade secrets, etc.
Follow Up Action
One year after the IP Audit Report was submitted; the Audit Team discovered that only one patent was filed by the company after the audit. The idea inventory was not reviewed or analyzed by the senior management for further action. No steps were taken with respect to legal instruments, marking, measures, etc.
The Audit Team learned that no action was taken as the investment proposals were shelved for the time being.
Not all companies see value in investing in IP protection for business benefit. Many companies do not know how IP can add value to their business, how to take advantage of IP Assets, and how IP can be used to increase financial value of the business. Even if they know all these, many companies in India choose to ignore IP as they do not trust the system.
All IP Audits are however not so successful, the next experience will outline an IP audit that went south.
Contributed with the support of the IP Strategy and Consulting Division of BananaIP Counsels.
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