Feedback Form
Home Features Mastermind Forums About Advertise Blog Network Contact Be An Author

IP Audit – A Practical “How to” Guide.

IP Audit – A Practical “How to” Guide.

“If you don’t measure it, you can’t manage it”.

Perhaps this expression is the single most compelling reason for any company, particularly an SME, to conduct an IP Audit. But what should be measured and how can we begin the process?

An IP Audit is defined as a systematic review of the IP owned, used or acquired by a business. Its purpose is to uncover under-utilized assets, to identify any threats to a company’s bottom line, and to enable business planners to devise informed strategies that will maintain and improve the company’s market position.

In many cases SME’s do not have the resources to undertake a full audit of all of it’s IP and will find it difficult to put a value to each of the components making up an IP portfolio. Putting aside these difficulties, and at the risk of reducing the exercise to the “too-hard basket” it is important for every business to document and value its most important intangible assets.

What will an IP audit uncover?

An IP audit will involve the identification of all of a companies intangible assets such as Patents, licenses, Brands, Trade secrets, designs, manuals, and know-how and will enable a company to identify successful and obsolete technologies. Understanding 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 jurisdictions that may have been inaccessible up until now.

Another significant feature of an IP audit will often result in a company wide appreciation of the true value of a brand, a patented technology or a design and in doing so will itself increase the value of the IP and the role that it plays in determining a company’s future marketing and production strategies. Stronger negotiating positions can be taken and robust long-term alliances forged only when true value of an IP and its surrounding circumstances are understood. Every IP has its own significance and should be managed to form part of a cohesive IP strategy designed to maximize the company’s earning potential, employee job security and customer loyalty.


An Example of an IP Audit

The table below is a guide illustrating how to kick-start the IP Audit process. At the very least an IP Audit should identify just what IP assets are owned by a business and just how important those are to the firm.

As an example, Let’s take the mythical Company, Aglaia. Aglaia is an SME employing 50 staff and has both import and export potential for its patented tea-tree formulations and associated health products. The company has been reasonably successful but faces stiff competition in the niche “Natraceutical” market. The Company has a house brand and a number of product brands.

The first step in the Audit process is to identify the readily identifiable. Assets falling into this category will include any Registered Trademarks, copyrights, designs or patents owned by the business, any licenses to third parties and any licenses from third parties, including cross-licenses. Also included in this category are things such as in-house work manuals, databases, recipes, franchise agreements, publications and product/process know-how. Once identified these IP’s are then scrutinized to determine who owns them, whether they remain Registered and enforceable and whether they are being used. The Individual components are also given an importance rating – by looking at factors such as whether or not they are to core technologies, the life expectancy of the technology and the exclusivity of the technology.

The second step is to itemize what might be termed external or market influences. These will include, the company brand, product brands, Company and Product Get-up, goodwill, Product Certification, Export certifications, Regulatory approvals, Distribution and Raw material networks, Client lists, and Marketing and advertising programmes.

In trying to estimate the value any of these items a good question to ask is how much will it cost to replace the item if it were lost, what potential does the IP have to increasing revenue and how is it being used.


Table 1 – An Example of a Provisional IP Audit

Internal Assets
Product Life(yr) Extent of Use Importance Estimated Value $
Trademarks
Tm1
Tm2
Tm3etc
10+
1-2
10+






100,000
40,000
10,000
Patents
P1
P2
P3 etc
15
2
10






2,000,000
10,000
5,000
Designs
D1
D2
4
10




25,000
100,000
Copyright
Forms,
Charts, etc
5
5




1,000
1,500
Trade Secrets 15   100,000
Custom Software 5   15,000
Recipes/formulations 10   60,000
Manuals 5   40,000
Publications 1-2   5,000
Training 1   50,000
Licenses in 1-2   50,000
Licenses out 5   100,000

External Assets

Company “House” Brand 20+   750,000
Product Brands 10+   250,000
Distribution contracts 5   25,000
Raw Material networks 5   2,000
Client Lists 1-2   5,000
Marketing/Advertising 1   5,000
Goodwill 50   100,000
Customer Loyalty 5-10   20,000
Product Certification 2-5   100,000
Import/Export networks 5-10   120,000


The above example merely illustrates the hidden assets found in any company (in this case an SME) and how an IP audit can be used to focus attention on the importance that an IP in maintaining and creating competitive advantage.

In the example, the most valuable assets are clearly to the House and Product brands and to a Patent listed as P1. Having made this assessment the Company Management can then make decisions to ensure that the Patented technology is not being infringed and that the House and product brands are used effectively and appropriately. Understanding which of the company’s IP assets are most important enables their full value to be realized and protected.

To conclude, an IP Audit makes sound business sense. Not only can an Audit identify company strengths and weaknesses it is also an extremely useful tool that can be used to bring together all of the different departments within an organization. All departments have an interest in some shape or form as to how a product is made, what goes into the product, how it is packaged, marketed and the price at which it is placed on the shop shelf – and as stated at the beginning - “if you don’t measure it, you can’t manage it”.
If you have any thoughts, comments or additions to the above discussion please e-mail icockburn@piperpat.com to begin a dialogue, or conversely consult an IP professional to determine best fit patent strategies for your firm.
Disclaimer: PIPERS endeavors to be as accurate as possible when preparing its articles and has taken all reasonable steps to ensure that the information contained herein is accurate. The contents of this article are for purposes of information only.
1 The author is WebEditor, Manager Advertising & Marketing at PIPERS - Global, A Patent attorney Firm with Offices in the United Kingdom, New Zealand, Australia, Singapore and Malaysia. The views expressed in this article are those of the author and do not necessarily represent those of WIPO.





IP Audit A Practical How to Guide - To learn more about this author, visit Ian Cockburn's Website.

Like this article? Share it with your friends

Article Feedback
 Article Feedback No article feedback found.
  Leave Your Feedback
article feedback

Article Feedback
Staging Diva
Debra Gould, aka The Staging Diva®, is President of Six Elements Inc., an internationally recognized home staging company. Inspired by many requests from aspiring home stagers wanting to start similar businesses, Gould created the Staging Diva Home Staging Business Training Program. Gould has trained over 1000 Staging Diva Graduates worldwide to start staging businesses. Buying decorating and selling six of her own homes in four years lead to an interest in real estate staging which she turned into a career with the launch of sixelements.com in 2002. Since then she has staged hundreds of homes in addition to teaching home staging training. Gould is the author of several home staging resources including a series of popular ebooks made up of a Design Guide, Color Guide and Portfolio Guide. For more information about Debra Gould visit stagingdiva.com. - Visit Staging Diva's Website

Cheryl Matthynssens

Cheryl is a life skills coach, licensed Chemical Dependency Counselor and a 20 year entrepreneur.  Cheryl's dedication to achieving a life of balance led to her expanding her teaching from the simple managing of life's daily challenges to adding financial well being as well.  A direct marketer with DrinkACT, she is gaining ground in the online community with her concepts of making sure business owners, entreprenuers and employees have well rounded life styles.  She opened up a small affiliate site - The Balance Guide-  to help others find resources for mental and emotional well being.  Visit Cheryl's blog to see more of the diversity beyond business she has began offering online at www.thebalanceguide.blogspot.com

- Visit Cheryl Matthynssens's Website


To learn more about the Evan Elite Author Program please contact us.

About The Author


Ian Cockburn
(Visit Ian's Website) Patent Attorney; Senior Advisor, Generics & Pharmaceuticals Division WebEditor, Manager Marketing & Advertising with 25 years experience in Pharmaceutics and Intellectual Property http://www.piperpat.com/AboutPipers /PIPERSpeople/IanCockburn/tabid/200 /Default.aspx

Ian Cockburn is a Gold author on EvanCarmichael.com
About The Author

View Author Blog
View Author Blog

View Author Video
View Author Video

Free Downloads


Ian Cockburn's

Complete
List Of
Branding
Articles

Name
Email
If you enjoyed this article, get Ian Cockburn's Complete List of Branding Articles For FREE!

More Ian Cockburn
What to do when confronted with a Cease and Desist Letter
Protecting Confidential Information Mums the word
Employees and their Inventions
Got a Good idea Think Provisional Patent
IP Audit A Practical How to Guide
Franchising Licensing What exactly are they and why are more and more people looking at this option
Two Apples a Football Tournament and a bunch of Trademarks
Due Diligence A necessity Not a Luxury
Making your Intellectual Property work for you
The Da Vinci Code What was it all about really
Free Downloads


 
 
 


Evan Elite Authors
Linda Richardson  
Joe Dager  
Jeff Foster  
Evan Elite Authors

Become An Author
Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details.
Become An Author

Evan's Latest Video
Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media
Evan's Latest Video

Business Opportunities
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"

How to Start An Online Business

Click Here To Learn More
Business Opportunities



Evan's Newsletter
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
Name:
Email:
Evan`s Newsletter

Free Downloads
Making SEO Decisions Icon Making SEO Decisions
Elevating Your Business Icon Elevating Your Business
Business Checkup Icon Business Checkup
Challenges Of Change Icon Challenges Of Change
Campaigns to Customers Icon Campaigns to Customers
Free Downloads - Complete List

Entrepreneur Tools and Guides
The Top 10 GTD Times Posts - Best Posts for Productivity
The Top 10 GTD Times Posts
Best Posts for Productivity
 
Top 50 Social Entrepreneur Blogs of 2009
Top Social Business Blogs
Top Social Entrepreneur Blogs
 
Entrepreneur Tools and Guides

SEO For Africa
SEO For Africa
Issiah Andoh Siwdo, Ghana,
Issiah Andoh
Siwdo, Ghana
SEO For Africa

If I Were A Startup...
Adam and Matthew Toren , $200k to $3.4 Mil in 3 Years
Adam and Matthew Toren
$200k to $3.4 Mil in 3 Years
Brian Scudamore, $200k to $8 Mil in 5 years
Brian Scudamore
$200k to $8 Mil in 5 years
If I Were A Startup... - Complete List

Famous Entrepreneurs
Joyce Hall, Hallmark Cards
Joyce Hall
Hallmark Cards
Dov Charney, American Apparel
Dov Charney
American Apparel
Famous Entrepreneurs - Complete List

Entrepreneur Advice
Keith Ferrazzi, Never Eat Alone
Keith Ferrazzi
Never Eat Alone
T. Harv Eker, Millionaire Mind
T. Harv Eker
Millionaire Mind
Entrepreneur Advice - Complete List

Popular Articles
(Premium Authors)

     The Franchise Buying Rules Have Changed
By Flo Schell
     Selling from your Heart
By Flo Schell
     Find Franchise Success with Connecting...Not Selling
By Flo Schell

Have A Suggestion?
Toronto Salsa Classes / Toronto Salsa Lessons Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
Have A Suggestion?

More Evan Carmichael
More Information