Importance of intellectual property audits for corporates: Companies are becoming more and more diligent in safeguarding their Intellectual Property, possibly because of a growing trend of IP awareness. Effective and timely registration of IPs is now what a company strives for. They are not taking any risk when it comes to their IPs, since it is the IP that derives profit for them.

With huge technological interventions, the reliance has been more towards intangible assets. Companies are relying more on their strength of intangible assets and focusing on increasing the competitiveness of the same. With more reliance over those assets, comes more due diligence. There are multiple ways a company uses for protecting its IP from any sort of infringement. A regular check on IPs, getting aware of crucial IP rights, keeping a record of intangible assets are a few things that the corporate must entail.

IP Audit is one such way for a systematic review of IP assets that the company holds. What is IP audit all about? In simple terms, an IP audit is the process that consists of reviewing the IP assets of the company. This might seem to be an uncomplicated task, but it entails in itself information which the company might not be aware of. IP audit is not limited to a systematic review but also provides strong competitive information in the field in which the IP deals.

Such a review always helps the company to address its intangible assets and to further strategies as per needs. As mentioned, through an IP audit, the corporate also gets a comparative understanding of how well its IP performs in the market. It is largely seen that the corporate does not realize the IP it owns until the IP audit. Getting along with the competitive information, the corporate understands what all are the strengths and weaknesses of its IP. The company can decide whether there is a need to acquire any IP or plan a new one based on its core technologies. Issues concerning licensing, joint ventures can be decided based on the audit report. Therefore, one can easily comprehend that IP audit can prove to be a major factor for maximizing business opportunity and increasing profit margin.

The primary and the most important benefit is the evaluation of IP that the company holds, thereby providing a strong report whether the strategic objectives of the company are met or not. In case, if not met, then the company can change its work or strategy. Another purpose that IP audit serves is to provide a strong division of techniques/ strategy/ products that serves for the profitability of the company. The company can decide which assets are not useful and which are those that form the bedrock of the company. The company can decide to structure the management of assets and evaluate on that basis. Therefore, the result of an IP audit helps in structuring the evaluation of IP.

Conducting an IP audit helps in ascertaining the benefits that an IP can give based on its assessment in the market. The assets value can see a great fluctuation based on the market condition and this audit can help in assessing the same. The company can decide on an alternate plan if the IP assets are not fulfilling the market needs, or the royalties being paid do not fulfill the needs, thereby, changing the strategy, if needed. With the business objectives put at a higher pedestal, there is a strong need to align the IP management with that of the business model. IP Audit helps in structuring this alignment. Evaluation of IP and its relevance is what must be done at priority, and IP audit fulfills the same. The benefits that IP assets have in the market and how the company leverages it, have a lot to do with the alignment. Therefore this IP audit fulfills this purpose. Undoubtedly, the result of IP audit can help the company add a new dimension of strategy, thereby, creating a strong stand in the market.

There are different types of IP audit, depending on the purpose for which it is conducted. There can be a General-Purpose Audit which, as the name suggests, is done by the corporate as a part of general practice, yearly or quarterly, based on the need and circumstances. There is a Special Purpose Audit or Event-driven IP audit which is done for a particular purpose. For example, if a company is moving towards getting into a joint venture or a merger in which there is a need to ascertain the valuation of the company, such an event-driven audit can be conducted. Lastly, the audit can be internal where the company conducts internally through its internal team and resources, or it can be external, where the company can outsource the audit, generally to an IP firm or other professionals.

News Courtesy: The Economic Times

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