Any business distinguishes itself with the valuable intellectual property assets identifying its goods or services
Whether your business is planning to merge with another business, or your management decided to divest an asset, penetrate new markets, or license out or franchise to locations outside of your base, it’s time to audit your intellectual property rights.
Gone are the days when due diligence focused merely on corporate ownership structure, financial and contractual liabilities. Any business distinguishes itself with the valuable intellectual property (IP) assets identifying its goods or services – and that asset could be its brand, corporate name, website, mobile app, patents, designs and/or copyright ownership. In either case, this right must be identified, and that is the first base of IP audit.
Preventing disasters vs. systematic review:
Ordinarily, IP auditing is, as defined by the World Intellectual Property Organisation, “a systematic review of the IP assets owned, used or acquired by a business.” However, in the absence of systematic reviews, an IP audit may have to serve as a disaster recovery plan to respond to claims of third party infringement.
Not uncommon to our region, IP audits were triggered as a result of a company going public and getting threatened with trademark infringement lawsuits. Another audit was triggered as a result of a global launch of a fund lacking any IP protection and vulnerable for attacks by competing interests. Ultimately, the objective of IP auditing as WIPO continues is “to uncover under-utilised IP 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.”
What is the purpose of an IP audit?
A business owners seeks answers or guidelines to take decisions. An audit will help a company determine what actions should be taken with respect to each IP asset or portfolio, in order to serve the relevant business goals of the company. Before proceeding, it is very important to identify the purpose of the audit to determine its scope. Who leads and is involved in an IP audit?
IP audits are typically conducted by external IP lawyers. Often, the IP Lawyer, who has a broad range of experience with various types of IP and IP valuation matters, will evaluate and review the company’s portfolio to determine where the appropriate IP lies. The company may designate a point person for the lawyer to deal with, who ideally will be someone that knows the IP concepts and technical aspects of the company’s business. When an IP portfolio’s monetary value is being reviewed, the IP auditing team may also include an accountant or economist who has dealt with IP valuation issues.
What will an IP audit achieve?
Conducting an IP audit requires the review of documents, including registration certificates for IP rights (trademarks, patents and designs), employment contracts (to identify ownership of copyright and patent rights), and other contracts with third parties such as with consultants and design agencies, non-disclosure and confidentiality agreements, licensing contracts, and others.
In addition to reviewing documents, the unwritten directions of a corporation is equally essential. In many cases, marketing or creative design personnel rapidly launch campaigns without considering third party rights clearances, and without assessing whether such campaigns incorporate IP assets.
When is an IP audit required?
Limited purpose audit:
Alternatively, there is a limited purpose audit, which is more narrow audit and usually conducted for a certain situation, such as a significant change in the IP Laws which may affect the protection of certain IP assets. Another situation that may require such an audit is when a company makes a plan for IP filing in a foreign country, as it will help the company to understand that country’s IP laws and processes, which may affect its rights.
How can IP Audits help fight cyber crimes?
Traditional IP rights, both registered and unregistered, must be subject of audit. Increasingly important, however, are social and professional media accounts as well as domain names. In many cases, neglecting these rights will make the business vulnerable to employee hate pages, hacking and Internet fraud, or misappropriation by competitors. In recent years, many UAE businesses have been targeted by Internet fraudsters aiming to misappropriate funds from vulnerable customers. Although Internet fraud may be difficult to prevent, taking down social media sites and domain name ownership can serve a great deal to curb the capability of fraudsters.
In conclusion, an IP audit is very important and should be a priority and regular practice for each business, as it help create a full picture of its IP assets, and ensure that they are properly protected and maintained. This, in turn, will assist in managing the IP assets, enhancing their value, and minimising any risks associated with their use. While a first-time audit may be painful, when assets are identified and proper strategies put in place for their management, subsequent audits will become easier. In addition, having a proper IP management policy will facilitate and ease business transactions, saving both time and cost. Regardless of how laborious an IP audit may seem, it is an essential tool for any business, and the opportunities and risks it may reveal are invaluable.
This is a sponsored article written by Omar Obeidat, Partner & Head of Intellectual Property Department, Al Tamimi & Company.
Copyright: UMS International Fz LLCTheme