Companies should take a holistic and proactive approach to IP management by identifying IP infringement in the market place and protecting against infringement or loss, by applying best practices for protection, customising the approach to the cost and operational factors unique to each business.
IP management also involves evaluating the clearest path to monetising IP through licensing enforcement, or sale, including use of technology and market research to assist with business expansion, product development, and licensing programs. This involves evaluating terms of license, sale or joint venture agreements to determine appropriate royalty rates and ownership percentages, depending on factor such as profitability, exclusivity and complementary assets required for production or sale.
Ascribing a value to IP makes a business more attractive to potential investors and buyers. A business will benefit by, inter alia, determining a better idea of the overall value of the business itself, providing a tool to measure and manage the assets, provide security and backing for lenders, provide taxation benefits and at the same time reduces proportion of business’ net worth attributed to goodwill.
Value assessment is not an accounting operation but rather an attempt to reconcile information pertaining to a given IP. Such as costs incurred, expectation of income, comparative advantages and market data, for the purpose of making better strategic decisions. The valuation process can take into consideration the impact of IP not only on projects and products but also on the company’s operation and on its competitive position as a whole.
IP audits are conducted in order to identify, protect and value these vital assets of any business. A need to conduct IP audits typically arise as a part of a larger due diligence investigation initiated in order to evaluate the state of the business prior to a merger or acquisition. At the very least, an IP audit should be conducted every so often in order to identify just what IP assets are owned by a business and just how important those are to the firm.
The first step in the audit process is to identify the readily identifiable IP. Assets falling into this category will include any registred trademarks, copyrights, designs, or patents owned by the business, any license to thrid parties and any licenses from third parties, including cross-licenses. Also included in this category are things such as in-house work manuals, database, recipes, franchise agreements, publications and product/process know-how. Once identified, the IPs are then scrutinised to determine the state of ownership, whether they have lapsed or not (in the case of registrable IP) and whether they are being effectively used
The second step is to itemise what might be termed external or market influences. These include the company brand, product brands, company and product get-up, goodwill, product certification, export certifications, regulatory approvals, distribution and raw materials networks, client lists and marketing and advertising programs.