Conduct an intellectual property audit

An intellectual property (IP) audit (also referred to as IP due diligence) is a review of the IP owned, used or acquired by an organisation. It aims to find out what IP is within an organisation, who owns it, the value of that IP, its legal status, and what to do with it.

When to conduct an IP audit

• You have new IP management or an audit is needed as part of an ongoing IP asset management program.
• There is a significant corporate change, such as a merger, acquisition or a planned public listing.
• You are considering entering a joint venture.
• There is a transfer or assignment of IP from one organisation to another.
• You have set up an IP licence or licensing program.
• There is a significant change in case or statutory law.
• A financial transaction involving IP takes place.
• You have implemented a new program or policy.
• You are enforcing or defending your IP rights.

Who should conduct an IP audit?

• An IP audit should be performed by a team consisting of at least one patent attorney with expertise in IP law, and one representative each from management, marketing, technology, and research and development.

How to conduct an IP audit

• Develop a plan for the audit that defines the area of inquiry, scope (which will vary depending on why the audit is being conducted, the size of the organisation and the significance of IP in the organisation's corporate plan) and the time schedule.
• Outline the responsibilities of each member of the audit team.
• Define the preliminary documents for review and decide which members of the organisation, present and past, to interview.
• Assess the mechanisms that the organisation uses to identify and protect each new piece of IP that the organisation develops and otherwise acquires.
• Identify all IP assets and develop an IP database/register containing information, such as
  • nature/description of the asset
  • how it works and how it is used
  • its stage of development (e.g. proof-of-concept, prototype, trials etc.)
  • the owner of the IP asset and any problems that exist with ownership
  • the inventors, creators or authors
  • when and how the asset was created or acquired
  • contracts and agreements in place (i.e. with employees and contractors)
  • the asset's IP status (e.g. pending or granted patent, trademarks etc.)
  • ongoing maintenance aspects (e.g. patent fees, licence fees etc.) expiration or renewal date of the IP protection
  • how it can be further exploited (e.g. by licensing)
  • the value of the asset, and how it fits with the corporate business plan.
• Analyse the IP and understand how it fits with the organisation's core objectives and competencies.
• Determine what action to take for each IP asset and decide when and how to protect the IP, if this has not already been done.
• Search journals and databases to identify possible infringements of the organisation's IP rights and to ensure the organisation does not infringe anyone else's IP rights.
• Review the organisation's compliance with the terms of any IP registrations or licences of IP rights.
• Document the audit results and present them to the organisation, with recommendations, if any, about where IP protection is inappropriately thin and where protection may be reduced.

Collect IP audit information

• Written documents - gather information from documents, reports, agreements and contracts (i.e. employee and independent contractor, joint venture, licence and research and development agreements) and computer databases.
• Interviews - obtain interviews on the technical, legal, managerial and human resources aspects, and collect information on licences, research and development reports, employee and contractor confidentiality and assignment agreements, and employee invention disclosure statements.
• Surveys - written questionnaires for present and former employees and contractors (across all business units of the organisation) to acquire information on inventions, know-how, methodologies etc.
• Observation - walk through the laboratories and workspaces and talk with the employees.
• Database searches - search patent databases, public registers and court registers for patents, trademarks, designs and any infringement actions. Also search publications in journals, competitors' brochures and other marketing material etc. to be kept informed of possible developments and infringements.