When was the last time your company audited its intellectual property rights? If your company plans to raise capital, secure other forms of financing or merge with (or be acquired by) another company, you will have to complete an audit. Of course, there are a number of other good reasons to conduct an audit of your company’s intellectual properties.
Intellectual property rights are an ever increasingly valuable asset. Even outside the entertainment industry, intellectual property rights are frequently one of, if not the most valuable asset of a company. Often these rights are acquired piecemeal, overtime without proper regard to inventory and rights control. It doesn't take long for the true value of these rights to become muddled. And without a clear indication of what rights are owned and controlled, your company may be under valuating its true worth.
The benefits of conducting an intellectual property audit include: determining exactly what rights you own and control; insuring that your rights are properly secured and recorded; providing a road-map for licensing and other exploitation of the rights; revealing instances of infringement which can then be addressed; revealing gaps or problems with ownership or evidence of ownership and chain of title which could interfere with enforcement actions or your exploitation of the rights.
The first step to conducting an audit is to define the scope of the audit based on your business needs and the intended use of the audit information.
The second step is to review all contracts, filings and other documents and materials relating to the intellectual property. This step includes running a search of the records of the copyright, patent and trademark offices, as appropriate.
Third, all liens, security interests and pledges affecting the intellectual property must be analyzed. Any lawsuits and potential lawsuits must be factored in at this stage. Again, a search of the public records must be made to uncover any interest in or claims to the intellectual property being asserted by third parties.
Fourth, a complete evaluation should be made as to the company's policies, procedures and practices for acquiring and maintaining intellectual property assets. For example, what agreements are used to acquire properties and what tracking systems are in place for monitoring and managing these rights, and are they sufficient? This is an especially important step as it can assist you to properly manage intellectual property rights internally, thereby saving money otherwise spent on attorney’s fees.
Fifth, other general policies that could impact on intellectual properties should be examined. These policies could include: document retention practices; internal and external e-mail protocols; and the handling of unsolicited submissions, among others. This step could result in additional, peripheral benefits to the general operational efficiencies of your company.
Obviously, there is more to conducting an audit than can be set forth in the limited context of this article. Each step of the audit must be performed in a thorough and thoughtful manner. This is an area in which Kaye & Mills has extensive experience. We welcome the opportunity to discuss with you in more detail the steps in and advantages to performing an intellectual property audit for your company.
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