Conducting an Intellectual Property Audit
An intellectual property audit can save a business time, money, energy reputation and market share.
Not all forms of intellectual property will be used in any one business. However, all businesses own some form of intellectual property. Intellectual property includes:
- Trademarks – protect the names, logos, and symbols used to identify and distinguish a business and its goods and services;
- Patents – provide an exclusive right to an invention;
- Copyright – prevent works such as (but not limited to) audio-visual works, software and artwork from being illegally copied or downloaded;
- Trade secrets – protect things like customer data lists or methods of procedure specific to a business; and
- Designs – protect the way a product looks.
In the 1990s, businesses generally overlooked the value of intellectual property because the value of a business was usually focused on tangible assets. Like many other things, the internet changed business functions and the significance of intellectual property has skyrocketed. This has increased the demand and necessity for intellectual property audits.
What is an Intellectual Property Audit?
An intellectual property audit is a systematic review of a business’ intellectual property assets.
This process can help start-ups and established businesses to assess exactly what and how many intellectual property assets they own, and how valuable they are to the business. Intellectual property audits reveal potential risks in a business, uncover underutilised intellectual property, ensure intellectual property is protected and give businesses the opportunity to develop internal processes and strategies to improve market position.
A thorough intellectual property audit involves not only a review of a company’s assets, but also the company’s intellectual property-related agreements, policies and procedures, and competitor’s intellectual property.
Why should your business conduct an intellectual property audit?
Identify what IP is owned: If a business is unaware of what intellectual property it owns, it is difficult to manage that property and protect it from loss or damage. Any intellectual property-related agreements must be reviewed along with independent contractor agreements to ensure that intellectual property rights are not compromised.
Preserve and enhance the value of existing intellectual property: A business may not undertake the required steps to protect their intellectual property, unknowingly destroying the possibility of proper protection. Certain intellectual property needs to be registered with the Government (e.g. trademarks). Others, such as patents and designs, require complicated applications. An audit can assist in identifying actions that need to be taken to prevent intellectual property from being lost, increasing the business’ value.
Identify new opportunities to profit from intellectual property: An intellectual property audit can assist in identifying the opportunities a business has in relation to intellectual property. For example, patenting a novel invention could increase profits as patents provide owners with the right to exclude others from producing the invention for a set period of time. An audit also provides the opportunity to educate key decision makers about intellectual property requirements.
Prevent unwanted legal disputes: Litigation is both complex and expensive. Small businesses generally forego legal disputes for these reasons, even if they have strong positions. Intellectual property audits can identify possible legal disputes and plan to avoid or resolve the issue. Audits are also important to identify the weaknesses in a business’ intellectual property rights so they can be addressed and corrected to result in stronger rights.
Facilitate and optimise business transactions. Intellectual property has progressively become more prominent in business ever since the internet emerged; it can generate a significant proportion of financing for some businesses. As an intellectual property audit gives an overview of a business’ intellectual property asset pool and their estimated value, the owners will be prepared for when they want to sell the business, or need financing.
Effective management of intellectual property is important to a business’s success. If you haven’t conducted an intellectual property audit on your business yet, please contact Butlers Business and Law on (02) 4929 7002 or fill an enquiry form out on our website https://butlers.net.au/contact/ .
Our solicitors specialise in intellectual property law and will be happy to help you protect your rights.