This post was first published on October 21st, 2011.
A company’s Intellectual Property (IP) is one of its most valuable assets. The value of a company’s IP is directly proportional to its R&D and innovative activities. The IP Value of most companies that are research-based is generally much higher than their tangible assets. Most companies in India have today realized the value of IP but fall short with respect to its planning, optimization, and utilization for gaining business benefits. In order to make the best of IP, every company must not only generate intellectual assets but also protect, manage, enforce and commercialize IP effectively and efficiently to gain maximum business and competitive advantage in the market. IP Audit will play an important role in enabling a company to achieve the said objective.
While objectives of an IP Audit vary from context to context, typical objectives can be summarized as follows:
To review and identify the intellectual assets of a company that are capable of being protected;
To build an IP asset inventory and related strategy;
To establish processes for using, licensing and enforcing IP assets for commercial benefit;
To help a company improve and build business value from IP;
To help a company comply with requisite IP requirements; and
To help a company maximize business and competitive advantage from its IP.
In the Indian context, we have noted that a bottom to top approach provides the best results. An IP audit includes various steps ranging from document review, visits to R&D/manufacturing facilities and so on to interviews with key personnel. Due diligence in an audit includes review and searches on government and other public databases.
Some important steps that form part of an IP Audit include:
Step 1 – Review of the company’s profile and organization structure.
Step 2 – Review of various processes of the company and interviews with personnel at each level in the organization structure.
Step 3 – Review of documents (The documents required to be reviewed include business documents, marketing documents, policy documents, process documents and so on.)
Step 4 – Report on IP Inventory and IP Compliance review; and
Step 5 – Review on government databases and other online resources.
What does a company get?
The deliverables from a standard IP Audit include:
IP asset inventory of a company, which includes protected and protectable IP;
IP Process and compliance report;
IP Strategy Report and Presentation; and
IP Policy and Process recommendations.
An IP Audit sets the platform for a company to take off with its IP assets towards maximizing business benefits. It provides the company with an IP road map that can take the company to the next levels in the IP and business ladder. Every company looking to derive business benefits from its IP must perform an audit and maximize its revenues, financial value and business.