Tuesday, 7 February 2012

A New Face of Audit: Intellectual Property (IP) Audit

Property considered as one of the important asset for any individual or organization. Few decades back, the value of tangible assets was more than the intangible assets. The reason behind this low value of intangible assets was ignorance or lack of proper tools for their identification. But by the change of century, the ratio of the value between tangible and intangible assets had been reversed. So it becomes important for any organization to keep track the magnitude, quality and applications of the intangible assets of the organization. This can be done only with the help of Intellectual Property Audit.

What is IP Audit?
IP Audit is a systematic evaluation of IP Assets available in the organization or it is an examination of inventory of information related to any particular technology which may be owned, used or acquired by the organization. IP Audit helps to assess and manage risk, remedy problems and implement best practices in IP Asset Management. Once the audit is completed, then a register should be kept of your IP rights.

Why IP Audit?
·         Helps in gathering information useful in understanding the updates of concerned business and market;
·         Powerful tool for preparing strategies to manage and maximize return on its intellectual property investment;
·         Helps to assess and manage risks so as to be able to implement best practices in solving problems;
·         Helps in designing R & D and Marketing strategies to minimize the exposure from defects discovered in the IP Audit.

When to Commence IP Audit?
An IP Audit should be commenced:
·         To know the status of the IP Portfolio;
·         Before a significant acquisition or merger of a technology or product;
·         To ensure that the intellectual property is properly protected and enhances the acquiring organization’s existing intellectual property interests;
·         At critical junctures in a company’s life cycle to ensure the continuing adequacy of such procedures and to detect defects therein;
·         To check the risk of infringement with the development of a major new product;
·         In response to a change or new development in the law;
·         When an organization sets up an intellectual property license or licensing program;
·         In connection with new programs or policies of the market.

Where one should search for IP Audit?
IP Audit includes following issues to assess:
·         Issued Patents
·         Patentable Ideas / Information / Technologies
·         Company’s owned technologies
·         Direct or Indirect Agreements
·         Direct or Indirect Licensing
·         Technologies Imported or Exported
·         Infringed Technology
·         Trade Secrets
·         Industrial Designs
·         Know-How Manuals
·         Government Contracts
·         Published Papers / Journals
·         Business Method Data
Uncovering and understanding of these assets will often provide a company with extra revenue streams other than those involving licenses and royalty payments. These revenues streams can come from Joint Ventures, Research and Development sharing, and distribution agreements in those jurisdictions that may have been inaccessible up until now.

Finally, we can conclude that Intellectual Property (IP) can be the best source of building revenue and to get competitive edge over competitors for various organizations but the need is to identify and utilize that IP in your organization and this can be possible only with regular Intellectual Property (IP) auditing. In the words of an intellect - “if you don’t measure it, you can’t manage it”. 

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