What is an intellectual property audit (“IP audit”), and why do you need one? Well, before you can protect something, you have to understand what you are protecting and how to protect it. An IP audit helps you understand your company’s IP and any IP-related issues and set forth a framework on protecting your IP.
Why Every Business Needs An Intellectual Property Audit
From building a product to building a brand name, your company is likely creating a slew of potential IP that can be a great asset to your business. There are four primary areas of IP: patents, copyrights, trademarks, and trade secrets. An IP audit will help identify which areas your creations fall into and what systems and procedures you will need to put in place to make sure that you have adequate protection.
IP protection involves more than just applying for a patent or registered copyright or trademark. Think about all the people that are in contact with your IP – from co-founders, employees, and contractors to third-party manufacturers and distributors. The IP audit will necessarily involve looking at license agreements, employment agreements, database access, publications, etc., that involve your products, services, or brand name.
The 5 Parts Of An Intellectual Property Audit
There are five parts to an IP audit: (1) identifying existing procedures in protecting your IP, (2) identifying relevant personnel involved in your IP, (3) assessing your written agreements, (4) assessing your IP portfolio, and (5) assessing your risk-avoidance practices.
First, consider what procedures or systems you have in place to protect your IP. Do you have a system to identify innovations or creations within your company? Do you have a way to obtain legal protection for your IP? Do you have employees signing confidentiality agreements? These are just some questions to ask in determining whether you have systems and procedures in place for IP protection. Note that systems and procedures may vary from company to company based on the company’s needs.
Second, identify the people involved in your IP. Think of those in your marketing arm or development team. Make sure they understand that what they are creating may be proprietary. For example, if you have a secret recipe, make sure that access to that recipe is limited to only essential personnel and that those people understand that they have to safeguard it. Clear communication is key.
Third, do you have any written agreements with employees or contractors regarding protecting your IP? Think of confidentiality agreements and non-compete clauses. Confidentiality (or non-disclosure) agreements prohibit unauthorized disclosure of information. Non-compete clauses – which are enforceable in only certain states – limit a former employee’s scope of employment either by industry, geography, etc., for a certain amount of time. There are also assignment clauses, which allow you to obtain legal rights in the IP that your employees are creating. In other words, employees agree to assign (or transfer) their IP rights to your company.
Fourth, assess your IP portfolio. Take inventory of all the intangible assets of your business and determine what areas of IP your assets may fall into. Then, assess how they are currently being protected. Have you filed applications for trademark or copyright registration? Do you have patentable assets that you want patented? Are you using reasonable efforts to keep your trade secrets secret?
Finally, assess your risks. Although protecting your IP from infringement by others is very important, making sure that you have systems in place to avoid infringing others’ IP is equally important. The last thing you want while running your business is a complaint served on you alleging IP infringement. In the patent area, have a patent attorney conduct a prior art search and analyze competitors’ patent portfolios to determine whether there are any concerns of patent infringement. For trademarks, list down all of the important trade names you are using and conduct a search on the Patent and Trademark Office database to determine any potential infringement. For copyright, assess the photos, music, videos, and other expressive works that you’re using and make sure that you have the necessary licenses. For trade secrets, make sure that new employees aren’t bringing in any confidential information from their former employers. These are just a list of examples that illustrate preventative measures you can take to minimize the risk of infringing others’ IP.
Overall, you should make an intellectual property audit a major priority within your company. With regular audits, you’ll be able to identify your company’s strengths and weaknesses when it comes to IP and create solutions to mitigate risks that make you vulnerable to IP infringement. If you would like to learn more, you can download a free copy of The Entrepreneur’s IP Planning Playbook.