“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 do you 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-utilised 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 their IP and will find it difficult to put a value on each of the components making up an IP portfolio. Putting aside these difficulties, and at the risk of putting the exercise in the “too-hard basket” it is important for every business to document and value its most important intangible assets.
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 business.
An IP audit will involve the identification of all of a companies intangible assets such as patents, designs, trade marks (both registered and unregistered), trade secrets, know-how, and existing licenses, 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. For example, these revenue streams could come from Joint Ventures, R&D sharing, and distribution agreements in jurisdictions that may have been previously inaccessible.
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 when true value of an IP and its surrounding circumstances is understood.
An IP Audit makes sound business sense. Not only can an IP 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 organisation. 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 market – and as stated at the beginning - “if you don’t measure it, you can’t manage it”.