VOL. 129 | NO. 59 | Wednesday, March 26, 2014
Intellectual Property Audits for Companies
GRAHAM MATHERNE | Special to The Daily News
Successful businesses routinely conduct audits of their assets, such as merchandise or financial holdings. Audits are fundamental to making informed business decisions that lead to an efficiently managed business.
The same holds true when it comes to auditing intellectual property assets. An intellectual property (IP) audit identifies your intellectual property and can help you protect it. An IP audit also can identify areas of risk regarding your use of intellectual property that belongs to others.
An IP audit does many things. It inventories obvious intellectual property assets, such as copyrights, trademarks and patents, as well as less-obvious intellectual property assets, such as domain names, trade dress and trade secrets. Additionally, an IP audit can segment areas of your business to identify and properly account for your intellectual property assets. For example, the research and development (R&D) division of your company would be viewed separately from the marketing division; with the R&D division presenting a patentable device or process and the marketing division presenting an advertising slogan in need of trademark protection. An IP audit also would identify the areas of your business where the development of intellectual property likely would occur so that measures are taken to protect the new intellectual property.
An IP audit also would determine whether these assets were protected legally and recommend further protection, if needed. In inventorying the copyrights, trademarks and patents, an IP audit would verify registrations, confirm the need to register, and set forth timelines to secure or renew relevant registrations. Depending on the intellectual property at issue, such as trademarks, an audit might suggest using periodic database searches to discover possible infringements. An audit also would review contracts used in your business to protect your intellectual property, such as work-for-hire and trade secret non-disclosure provisions in employment agreements, and warranties in sales agreements prohibiting your customers’ misuse of your intellectual property embodied in the goods that you sell to them.
An IP audit also would address the risk concerning your use of another business’ intellectual property, whether it’s use of another’s patented process to manufacture the goods you sell or whether it’s an application you are licensing from another business for use on your company website. An audit would review language in the agreements at issue, such as license, royalty, or vendor agreements, wherein the provider warranted that it had title to the intellectual property and that the provider fully indemnifies your business from any infringement claim from another.
To know what intellectual property you have or are developing, to understand better how to protect these valuable assets, and to understand how to manage any risk you may have when using the intellectual property belonging to someone else, requires an IP audit. In today’s business environment, an IP audit, simply put, is an important business practice and a critical tool for business success.
Graham Matherne is a member of Wyatt, Tarrant & Combs LLC’s Litigation & Dispute Resolution Service Team.