New and established businesses alike have one often overlooked and under-utilized category of assets: intellectual property (IP) assets. Are the business’s IP assets all known? Properly protected? How does the business account for new IP assets created by the business? Are they being appropriately monetized?
These are all questions that many businesses should consider to ensure that all a business’s assets are being properly utilized. One way to do this is to conduct an IP audit.
What is an IP Audit?
As recently described by the American Bar Association, an IP Audit is a thorough analysis of a business’ IP assets. A business’s IP assets could include registered patents, trademarks, copyrights, or trade secrets. Depending on a business’s resources available to dedicate to the endeavor, an IP audit can take varying forms of sophistication. The most basic form can be the cataloging of all business IP assets and an indication of whether such assets are registered with the appropriate entities (see our previous articles regarding trademark registration and copyright registration).
Why Perform an IP Audit?
An IP Audit can be an invaluable tool to both comprehensively account for the non-tangible assets a business has, to effectively leverage those assets, and to ensure that steps can be taken to protect those assets.
If a business performs maintenance on its own IP assets – including, for example, timely filing a Declaration of Use with the USPTO to maintain a trademark registration – then an IP audit can be done to ensure that those deadlines are known and reminders are set.
IP Audits can also be used to analyze whether, when new IP assets are created, they are added to the business’s IP database so that it can be registered and maintained as appropriate.
An IP Audit can analyze whether a business has prepared adequate employment or independent contractor agreements to ensure that (1) content created by employees or independent contractors are the property of the business; and (2) that non-disclosure agreements, as appropriate, are included in such agreements to prevent disclosure of business trade secrets.
If a business relies upon licensing its IP for revenue, an analysis of all licensing agreements to ensure consistency and adequacy in the agreements is crucial. If utilizing licensing agreements has not been considered as a potential revenue stream, then an analysis of the assets available for monetization can be completed.
When positioning itself to be acquired, a business’s database of IP assets can strengthen the business’s hand at the negotiating table. If a business is confident that it has properly accounted for all of its IP, including by properly registering its IP, maintaining that registration, and enforcing its exclusive right to its IP, then that can greatly enhance that IP’s value.
Is the Return Worth the Investment?
The answer to this question depends on how important IP assets are to a business’s success.
If a business does not know all of the IP assets it possesses, then it has no way of capitalizing on such assets. If a business has failed to put proper processes in place to ensure notification from its IP creators that new assets have been created, or because it has failed to secure its possession of the assets by failing to register them with the proper entities, then it may be missing out on these additional revenue streams.
Even small businesses with limited resources can benefit from less robust IP audits, as it could put the business in a position to properly deploy those assets as the business expands.
By knowing what assets your business has to work with, your business can be better prepared to take action to leverage and protect those assets.
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