Why Perform an IP Audit? 5 Reasons
When you’re launching a new product, service or marketing plan, it’s easy to get caught up in the excitement and forget about all the pitfalls that lie ahead. An intellectual property audit is an excellent way to identify potential IP opportunities and risks before they become real problems. Even though you might not think of your company as having much in the way of valuable assets, almost every business has something that could be stolen or compromised. An audit can help you identify your company’s most important IP as well as any areas where you are at risk of losing it. A thorough audit will also give you a handle on how much value your company’s IP has from a financial standpoint so that you can make informed decisions about where to invest time and money in order to protect yourself in the future.
Here are some reasons to perform an IP Audit:
Create an inventory of your IP
An inventory of your IP assets is basically a list of what you have and where it sits. By performing an IP Audit, you can identify your company’s IP assets, classify them, protect them, and take advantage of them to gain business value. Simply put, an IP audit helps you create a listing of all your IP whether it is protected or capable of being protected. It will also help you understand value of your IP assets, and help you make decisions on where and how much to invest. An IP Audit will also help you understand status of each item in the inventory, and where you legally stand on it.
Protect Your IP Assets
The first and most obvious reason to perform an audit is to protect your IP assets. As we mentioned above, almost every business has something that could be stolen or compromised. An audit can help you identify your company’s most important IP as well as any areas where you are at risk of losing it. The first step in protecting your IP assets is to know what they are. An audit will help you do that by looking at all of your products and services as well as any research and development you have conducted. It will also help you identify any IP you may have inadvertently created and which you may not even know about. Once you know what your IP is, you can start taking steps to protect it.
Estimate the Value of Your IP Assets
Patents can increase the financial value of your company. This is because many investors will look at your company’s assets and decide if they want to invest in your company based on those assets. If your company has a patent, it can help increase the financial value of your company. Patents will help to not only attract investors to your company, but also to increase your company’s financial valuation. This will help in getting more funds and investments by giving away less take to investors.
Identify Potential IP Risks
An audit will help you identify the potential risks associated with your IP assets. This can be as broad or specific as you like. For example, you may want to look at the overall risk of your IP assets being stolen or how other IP could be infringing on yours. You may also want to look at specific areas that could be risky for your IP assets such as your website’s content, your employees’ ability to use social media or your marketing materials. An audit will help you look at every area of your business as it pertains to IP to identify potential threats. Once you know what those threats are, you can take steps to minimize them.
Determine the Financial Value of Your IP
As we mentioned above, an audit will give you an idea of how valuable your IP assets are. This value comes in two parts: the asset’s inherent value and its potential future value. When you’re looking at the inherent value of your IP asset, you’re basically asking what use it has right now. For example, if you have a patent on a specific product or process, the inherent value of that IP is that it is protected by law. The same goes for a copyright or trademark. On the other hand, the potential future value of your IP asset is basically a guess as to what it might be worth in the future. You can use methods like discounted cash flow analysis or an option pricing model to come up with a figure based on what similar IP has sold for in the past.
As we’ve seen, there are a variety of reasons why you’d want to perform an audit of your company’s intellectual property. An audit will help you identify your company’s most important IP as well as any areas where you are at risk of losing it. An audit will also give you an idea of how much your IP is worth so that you can monetize it if you choose to do so. From a legal standpoint, an audit will also help you create an inventory of your IP to keep track of it and be aware of any changes in its status.
Disclaimer: This article was initially generated using an AI technology, and was later updated by IP attorneys at BananaIP Counsels. The authorship of this article vests with the AI technology, and BananaIP or it’s attorneys do not take any responsibility or authorship with respect to the article. The opinions expressed in the article are those of the AI machine, and not those of attorneys of BananaIP. You are advised to take legal opinion before taking any action based on this article. BananaIP or it’s attorneys do not endorse the authenticity or factual validity of this article, and all liability is expressly disclaimed.
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