Conduc-ng an IP Audit and Managing IP Assets - agepi

WELCOME TO ...
<strong>Conduc</strong>'ng an IP
Audit and
Managing IP Assets
_________________________________________________________________________
WIPO in cooperation with AGEPI
Tailored Workshop for
Small and Medium Seized Enterprises
Larysa A.Kushner
WIPO External Consultant
EHU Professor of Law
Chisinau, Republic of Moldova
November 14 to 15, 2012

Overview
1. Understanding an IP Audit
2. Preparing for an IP Audit
3. <strong>Conduc</strong>'ng an IP Audit
4. Aer comple'ng an IP Audit
5. From IP Audit to IP asset Managementmanagement
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1. Understanding an IP Audit
What is the status of your IP porGolio
– Do you know all your IP Assets
– Do you have an IP por6olio and is it up to date
– Which of your IP assets are registrable and
should they be registered
– Are they registered in poten>al foreign markets
– Do you conduct IP Audits

1. Understanding an IP Audit
Firms do take inventory of physical assets
§ Required by accountants / tax authori>es
§ To see whether they need replacement / upgrading
But do firms take inventory of IP Assets
OJen
§ Not usually seen
§ Ignorance of value of IP Assets
§ Does not appear in Balance Sheets
4

1. Understanding an IP Audit
IP Asset Management
Know what your IP Assets are
§ IP Assets not restricted to registrable rights
(e.g. patents, trademarks, industrial designs)
only
§ Any intangible crea>ve output that is of value
to business is an IP Asset
5

1. Understanding an IP Audit
• IP audit is a systema>c review of the IP owned, used or
acquired by a business so as to assess and manage risk,
remedy problems and implement best prac>ces in IP asset
management
• IP audit involves undertaking a comprehensive review of a
company’s IP assets (e.g. patents, trademarks, industrial
designs)
• But also related agreements, relevant policies and compliance
procedures.

1. Understanding an IP Audit
An IP audit can also help you to establish:
• Whether or not you hold registered IP rights
• Who owns the rights and if there are any relevant
condi>ons or restric>ons of use
• If they are being used effec>vely
• If they are at risk of being challenged by others
• whether you have an effec>ve IP management and
maintenance plan in place and
• records of your IP crea>on and ownership.

1. Understanding an IP Audit
Type of IP Audit
• General purpose IP audit
• Event-­‐driven IP audit
• Limited purpose focused IP audit

1. Understanding an IP Audit
• General purpose IP Audit
is done in the following types of contexts:
• Before establishing a new
• Before implemen>ng new policies, standards, or proce
dures rela>ng to IP.
• Before implemen>ng a new marke>ng approach or dire
c>on, or is planning a major reorganiza>on of the comp
any/new IP Managers
• Done once, repeated regularly

1. Understanding an IP Audit
Event driven IP Audit
• oJen called “IP due diligence” (part of a general DD audit)
• oJen requires “non-­‐disclosure” agreement
• Aims:
– to iden>fy, locate IP assets and to assess the nature and scope
– to evaluate their benefits
– to allocate risks associated with the ownership or use of them
– To iden>fy problems in and barriers to the transfer, hypotheca>on or se
curi>za>on of the IP assets under considera>on
– To iden>fy and appor>on between the two par>es the expenses incide
nt to the transfer of IP assets under considera>on.

1. Understanding an IP Audit
When
• IP due diligence is done in the following types of contexts:
– Merger & Acquisi>on or Joint Venture
– Financial transac>on involving IP
– Buying or selling a division, product line
– Launching a new product or service
– IP Licensing
– IP disputes
– Outsourcing

1. Understanding an IP Audit
Limited purpose focused audits
• tend to be situa>onal in nature
• are typically used to jus>fy a certain legal posi>on or the
valua>on of a par>cular IP
• ate done in the following types of contexts:
– Personnel turnover
– Foreign IP filings
– Using the Internet for business purposes
– Significant changes in IP law and prac>ce
– Preparing for li>ga>on

1. Understanding an IP Audit
IP Audit team
• best done by a team that includes exper>se in IP and
representa>ves of the relevant technical areas of the company
as may be appropriate for ensuring maximum effec>veness
• should have a basic understanding of the product lines, the
relevant business environment and the future plans of the
company
Non-­‐disclosure agreement for internal staff and external experts
are involved

2. Preparing for an IP Audit
Clarity about the purpose
Background research for preparing an audit plan:
• Internal and external rela>ons and interac>ons
• Business strategy
• Importance of IP Assets
• Status of IP management
• IP disputes
• Financing

2. Preparing for an IP Audit
Preparing an IP Audit plan
• Sets out the purpose,
• The specific area(s) of the business to be covered -­‐ e.g.,
divisions, lines of business, affiliated or non-­‐affiliated agency
opera>ons,
• The scope of the audit -­‐ e.g., only registered assets or a
broader scope,
• The >me table for the audit,
• The responsible person for each part of the audit,
• The form of the final audit report to be produced

3. <strong>Conduc</strong>ting an IP Audit
• Star'ng with a detailed check list
• Audi'ng different contracts/agreements
– Licensing agreements:
– Assignment agreements:.
– Employment and independent Contractor agreements
– Joint venture & Collabora>on agreements:
– Government contracts/grants
– Other Agreements:
• Technology transfer, or know how, or technical assistance agreements
• Design and development agreements
• Seelement agreements
• Franchise agreements
• Royalty agreements
• Marke>ng agreements
• Distribu>on/Distributorship agreements

Audi'ng IP assets
3. <strong>Conduc</strong>ting an IP Audit
• Iden'fying and recording IP assets
• Determining ownership and legal status of the IP assets:
• Ownership
• Restric>ons on use
• Relevance to business
• Encumbrance
• Infringement
• Detec'ng risks and infringement of IP rights
• Taking necessary steps for crea'ng and maintaining IP assets

Using the results of an IP Audit
1. IP analysis and grouping
5. After completing an IP Audit
• Techniques, innova>ons, and ideas that are essen>al to your
products and services, and to the markets your company has
decided to serve
• Intellectual assets of real poten>al but not to your company
• Assets’ that seem, on balance, to have no great value to your
company or to anyone else
2. Evalua>ng IP assets
3. Overall review on IP assets and IP policy
4. Preven>ng or being prepared for li>ga>on
1. Business strategy formula>on

6. From IP Audit to IP asset management
Corporate IP management:
development of an IP strategy
• on acquisi>on,
• on exploita>on,
• on monitoring and
• on enforcement of IP rights
inclusion of IP in the overall business strategy of the enterprise
• R&D strategy
• Funding strategy
• Marke>ng strategy
• Accoun>ng
• Technology acquisi>on
• Export/foreign investment strategy

6. From IP Audit to IP asset management
1. Forma>on of IP asset management team
– can be based on IP Audit team
2. Crea>ng an IP culture
– Policies, guidelines, training
3. IP policy monitoring

Op'mizing value from IP Assets
• IP asset crea>on.
6. From IP Audit to IP asset management
• Reducing costs of third-­‐party IP claims.
• Building value from product markets using IP assets.
• Crea>ng non-­‐core revenue streams.
• Crea>ng addi>onal revenue through core business licensing.
• Reducing costs of unused IP assets.
• Reducing new product development costs
• Evalua>ng the IP assets of an acquisi>on or investment target
(due diligence).
• Assessing business direc>on and strength.
• Discovering unclaimed business opportuni>es.
• Discovering business expansion opportuni>es
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6. From IP Audit to IP asset management
• Avionics system
– mature product
– commitment to support customers
• high cost to change
– s>ll profitable, but none core
• Licensed to main customer
– Deal structure
– NPV increased, GNPV
– Regain strategic focus
• Win-­‐Win result
Based on the materials of Julian Nolan

Thank you for your attention!
Any Ques'on
WIPO’s website for SMEs :
www.wipo.int/sme
Contact address: kushner.lora@gmail.com