Most companies routinely perform inventory audits of their physical assets…but — even though it’s not always on the radar — performing audits of intangible assets is equally (and perhaps even more) important.
The objective of an IP audit is to identify and protect intellectual property assets that provide you with a competitive advantage and promote the goodwill of your business. By creating a process to identify and take steps to protect intellectual property at least once a year (and perhaps more frequently if IP is a major component of your business), you can ensure that valuable assets are not made public, or otherwise lost or compromised, prior to taking the appropriate actions to protect them. An intellectual property audit and due diligence review should also be performed in connection with mergers and acquisitions and other buy/sell transactions, as well as financing transactions that affect IP assets.
Typical intellectual property assets include product, service and company names and logos (trademarks), website content, written materials, and creative works (copyrights), formulas, processes, product designs and inventions (patents), and proprietary customer lists and other confidential information, such as pricing data and vendor information (trade secrets). Depending on your industry and the types of products and services you offer, there may be other intellectual property assets to consider. These items should be identified and reviewed on a regular basis.
An audit should include a variety of information, such as:
- Name/Description of IP – Identification of mark or domain name, title of copyright or patent
- Subject of IP – List of goods/services, copyrighted material, description of patent
- Status of IP – Application and registration number(s), intent-to-use or actual use-based mark, upcoming filing deadlines, IP not protected, related litigation or other disputes or issues
- When/How/Where the IP Has Been Used – Dates of first use/publication, where/how IP used/published, U.S./International use, and any licenses or agreements regarding the IP
- Chain of Title – IP owner(s), list of all IP transfers, note any transfers that have not been recorded, note any gaps in the record of ownership
Once your intellectual property has been itemized, you should determine whether any additional protections or updates to existing protections are necessary. You should also review company policies and agreements with employees, independent contractors and licensees regarding the creation, use and protection of your (or third party) IP assets, as well as confidentiality and non-compete protections. Additionally, your social media, website and insurance policies should be reviewed, as well as your advertising and marketing materials. You may also consider whether you need to implement systems to monitor unauthorized use of your IP assets by others and address how to approach infringement scenarios.
Internal IP audits are a great start, but you should consider consulting with an IP attorney to ensure all of your IP has been identified and is protected.