Now more than ever, intellectual property comprises an irreplaceable and crucial part of any company’s success and its competitive edge. IP embodies many different forms, such as patents for innovative and handy features which make products more desirable, or design patents which protect how the products looks; trademarks which protect names, logos and symbols used to identify and distinguish a company and its products; trade secrets which protect customer information, supply chain info, formulae and recipes; copyrights which protect software, artwork, written work, marketing materials and guides. For these reasons and many others, properly managing the intellectual property that your business has access to is absolutely vital for paving the road to both short term and long term success in your industry.
Business Intellectual Property Audits
It used to be the case that most businesses actively focused on acquiring tangible assets but in recent years the trend has shifted such that the acquisition and management of intangible assets, like intellectual properties, has become far more important for most businesses. This trend owes itself to the importance of internet business and e-commerce. Now, businesses increasingly understand and recognize the need to garner their intellectual property as that may very well be the unique asset that sets apart their brand from all the others.
Intellectual Property Rights and Laws
It is important to understand intellectual property rights and laws when auditing your intellectual property. With the rising significance of IP assets, most companies can greatly benefit from an IP audit, which is a complete, systematic review of a company’s intellectual property assets and its associated risk and opportunities. IP audits are so vital because they can assess and enhance a company’s IP assets, correct any issues in intellectual property rights, put underutilized IP to better work, identify any risks that a company’s products may infringe upon another’s IP rights, and put forth more efficient IP management habits and practices. A truly thorough IP audit will not only review and assess a company’s IP acquisitions, but also its IP-related agreements, contracts, policies, and even its competitors’ IP assets in a related industry or field.
Who Conducts Intellectual Property Audits?
Since intellectual property rights and laws are very complex and vague, IP audits are conducted by a lawyer or law firm that specializes in intellectual property law. The company will appoint someone for the lawyer to work with, ideally someone from the company that is aware of the technical details of the company’s business and their IP assets. Typically, most companies will not know much about IP so the lawyer will usually provide an educational overview of IP and make some suggestions on how the company’s existing IP rights can be protected and improved based on the preliminary information they are provided regarding the company’s IP.
At this point, the audit continues to go more and more in-depth, potentially involving other key employees who are involved in the creation or acquisition of current and prospective intellectual property or technology for the company, with each person contributing their knowledge surrounding its research, development, sales potential and marketing outlook. If the company already has a greater awareness of IP, the lawyer can engage in discussions surrounding the company’s IP portfolio and its competitive positioning in their industry with relation to market trends and future demand.
Benefits of Intellectual Property Audits
As we implied, IP audits have huge potential benefits for companies but their scope and purposes can be tweaked to better suit the company being audited. For instance, general use purpose audits are wider and “bigger picture” in scope and they can be hugely helpful to start-ups and established corporations alike to both assess and protect their IP in addition to clearly outlining their future IP development needs. On the other hand, event-specific IP audits can be incredibly useful for companies that need to:
- Measure the potential impact and value of acquiring, selling, or licensing IP;
- Determine IP rights and potential risks surrounding the acquisition or production of a new service or expansion into a new market;
- Investigate how well licensees are complying with set terms and agreements;
- Clarify the potential risks that come with adopting a new trademark or branding direction;
- Quantify the impact that comes with a key employee’s departure surrounding IP rights and market value;
- Contend with the ramifications of the expiration of IP rights as well as changes in competitors’ IP rights;
- Highlight the company’s value to provide for financing or investment expansion or prepare its value overview for a merger, joint venture, or sale;
- Assess infringement claims from a third party and its possible consequences to the company
- Improve the power and integrity of trade secret protection contracts and agreements.
How Can IP Audits Be So Important?
- They show you what IP is yours
- The thing about intellectual property is that it’s here to stay. Because it’s now more important an ever before to protect and look after your company’s IP assets, it pays huge dividends to understand how to best care for it. Any successful business is well-managed and meticulously careful regarding its branding, products, and customer experience–of which intellectual property plays a more involved role with each passing year.
- So, since intellectual property is part of business, it necessitates management just like inventory, equipment, and company productivity. If a company doesn’t know what IP it has access to, then it can’t manage that IP nor protect it from infringement. As such, perhaps one of the most important things an IP audit can offer any company is also perhaps one of the most basic pieces of knowledge and awareness–informing the company about which IP it owns and has exclusive rights to, so that the company can make effective executive decisions regarding its protection, development, and licensing.
- Further, any already-existing IP contracts, like licensing agreements, independent contractor or consultant agreements, transfer and settlement agreements, and joint ventures can all be reviewed to make sure that your IP rights aren’t being misused.
- They point out how to make the IP you already own more valuable
- Having your company’s IP protected by the law is a vital step towards pre-emptively preventing any future infringement, as well as protecting your assets in the event that it does happen. Intellectual property has a melange of state and federal laws which uphold and protect it so long as the government recognizes the IP. Thus, an IP audit can serve to identify any kind of error or mishandling on the company’s part toward its own IP. That way, the IP audit can shed light on which errors need to be corrected and which pieces of intellectual property still need to be patented, copyrighted, etc. These seemingly simple fixes are crucial to making sure your company maintains the exclusive rights to your IP.
- IP audits bring to light new opportunities and ways to make profit from your IP
- Intellectual property law is intentionally vague and has many loopholes and cracks that can be exploited. Many executives, businesspeople, and even non-IP lawyers will not fully understand the subtle differences between copyrights, patents, trademarks, and trade secrets, much less which are relevant and applicable to your company’s assets. Further, they would not know the creativity and craftiness that is needed to obtain a U.S. patent or even which things are capable of being patented, or where the limitations of the patent would lie. Since they aren’t aware of any of the aforementioned, they also would not be aware that new commercial and business opportunities in both domestic and global markets can be tapped into through clever IP licenses and that competitors’ efforts to obtain IP can be stopped and monitored along the way. Therefore, a huge value of IP audits is that it teaches executives, inventors, and marketers of your company about the value of IP and how to actively protect your IP opportunities before they are lost to another company or brand.
- IP audits prevent expensive disputes and legal battles.
- Because intellectual property litigation is very costly and consulted, the stark reality is that most smaller companies oftentimes get forced to forgo litigation even when they have a winnable position. IP audits can assist these companies in anticipating future areas of dispute and can aid them in planning effective avoidance strategies. For instance, an audit may identify a need for a freedom-to-operate study, which determines competitors’ conflicting IP rights and options such as designing around, licensing, or anonymously challenging competitors’ rights to the designs themselves. As such, an audit identifies weaknesses in the audited company’s IP rights that can be addressed and remedied with timely actions, resulting in stronger rights that are far less likely to get challenged once those rights are asserted.
- IP audits optimize business and further facilitate it.
- Because intellectual property has become such a huge player in modern industries and in online commerce, its monetary value is more important than ever. Since an IP audit provides companies with an up-to-date understanding of their IP assets and its value, the companies’ leadership is better equipped to deal with opportunities which may come up, such as a third-party offer to buy up the company, or a new sales or expansion opportunity that requires financing.
- In conducting these kinds of IP audits, it’s most useful to may attention to:
- Valuable product features that can be but aren’t yet patented,
- Fixable issues in existing patents,
- Invalid or incomplete employee agreements that pose a risk to competitors’ access to trade secrets,
- Trademarks that are crucial to companies’ identities that are not yet sufficiently protected from copying,
- Product designs, builds, and configurations that can be but still aren’t protected by design patents,
- Patent and trademark royalty payment terms that have been ignored or violated,
- Missing notices of patent, trademark, and copyright that limit the company’s authority to enforce IP rights and to claim damages, and
- Lucrative opportunities for licensing IP into new markets.
- IP audits are directly responsible for millions of dollars worth of quantifiable benefit and profit to companies and corporations, especially for payment of patented tech that was not originally thought of as patentable.
The Difference Our Los Angeles Intellectual Property Lawyers Can Make is Huge
Here at KAASS LAW, we value our clients’ intellectual property above all else because we recognize the innovation and creativity that it takes to create new and groundbreaking ideas, inventions, and designs. We protect our clients’ IP like our own because we understand its true value to the company and to the company’s morale and identity. We have worked with many individuals, entities, and businesses to assess, evaluate, defend and diversify their IP assets. If you feel that your company has been underplaying the value of their IP, or even been completely unaware of just how significant a role that kind of asset can play, then we definitely encourage you to give us a toll free call at 310-933-5171 to speak to our experienced intellectual property lawyers today. We work with our clients to make sure they always have the competitive edge in their respective industries and to ensure they understand their own worth and value. Knowledge and awareness can make all the difference when dealing with intellectual property so please do not hesitate to get in touch with us about any questions or concerns you may have.
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