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Importance of Intellectual Property (IP) Audit


“If you don’t measure it, you can’t manage it” is a very apt saying and explains the entire intent of this service vertical. Intellectual Property and its laws have changed significantly in the last few years. Though there is no statutory provision for performing an Intellectual Property audit yet, it’s indispensable when managing an organisation’s intangible assets. Considering the value and power of Intellectual Property, too much is at stake to ignore the promotion, protection, and commercialisation of such valuable property, and ignorance of the laws can lead to legal disputes. It is not surprising that infringement lawsuits are proliferating, in view of which the process of IP Audit has been regarded as a crucial tool for efficient management of Intellectual Property.


Audit process comprises different stages, such as data collection of IP Assets of an organisation along with Intellectual Capital, evaluating data and analysing the IP Assets so as to evaluate trends and ascertain the asset’s respective inadequacies and procedural protocols regarding overall IP Asset Management that require improvement. Enumerating an organisation’s IP assets amounts to an IP audit done by proper and systematic analysis of each facet of IP that is in the possession of the organisation, which includes the list of organisational, relational and human capital. IP Audit also helps evaluate organisation’s elementary and critical capabilities by a comparative assessment of input versus output of the company.

It thus becomes mandatory for any organisation to protect and safeguard its Intellectual Property. To do so, companies must understand what rights an organisation owns, licenses, monetizes/commercializes, along with any other manner in which the organization interfaces with its own and third party IP, and whether the organisation is defending/enforcing/monetizing its right correctly. Also important to evaluate is whether the mode of protection is adequate, and whether it has a proper procedure to determine what rights it should be registering, whether it has a system in place to minimise the risk of infringing third party rights including evaluation of contractual term for the right assigned or used under license, how trade secrets are protected from employees, should the organisation develop back up ‘mark’, how big should be the inventory of trademark and such other vital issues. An IP Audit is therefore a systematic review of a business’s owned, used, or acquired IP. Its purpose is to uncover under-utilized assets, identify any threats to a company’s bottom line, and enable business strategists to devise informed strategies to maintain and improve its market share and brand equity. IP audits can be of various types, such as general-purpose, event-driven, and limited-purpose audits, and vary with the client’s needs.

  • A general purpose audit is a regular audit conducted as a general review practice periodically.
  • An event-driven audit is done when the client/ company enters a particular financial transaction or event.
  • Limited purpose Audit, as the name suggests, is limited to a particular purpose and specific selected intellectual properties.

How To Go About Conducting An IP Audit?

The purpose of conducting an IP audit must be kept in mind before carrying out an IP audit so that a structured plan can be made with available resources. A track of activities involved in IP audit is essential to assess if there are any deviations from pre-planned structure. IP audit involves several processes, which can be explained briefly.

  • Initial step is the inventory check, where all IP assets along with description of nature of investments are determined and documented.
  • Next step is the process of scrutiny where it is checked if an existing IP right infringes any of the co-existing rights.
  • Final step is where an IP auditor identifies legal, regulatory, and procedural lapses related to management of IP.

Through this process, efficient risk assessment is achieved, enabling adoption of adequate steps for mitigation.

Experience – Intellectual Property (IP) Audit

IIPRD has worked with numerous Indian and International Corporates to help set up their IP Cells and conduct comprehensive IP Audit and Due-Diligence programs, running into multiple days for each Audit Exercise. Few exemplary clients represented by IIPRD and its full service IP and Commercial/Corporate Law Firm, Khurana and Khurana, include Reliance Jio, Tejas Networks, Indian Oil Corporation, Titan, Dhanuka Group, Sun Pharma, Bharat Petroleum, Glenmark, CDAC, CDOT, among several other clients. IIPRD has set up a dedicated IPR Audit cell, which deliberates and works on issues that business organisations might face.

If you need to establish correct practices to manage your Intellectual Property, please reach out to us at IIPRD, and we assure you that our team having the right skill set across technology domains, would help you introduce and place on record the correct IP Management systems.

Our Approach – Intellectual Property (IP) Audit

IIPRD’s Intellectual Property (IPR) Audit cell goes through an unbiased and comprehensive audit and implements thorough due diligence practices that can help the Customers in:

  • Establishing appropriate and fitting IP strategy and correct practices to mitigate risks and facilitate structured IP management at Corporate level.
  • Introducing and placing on record correct IP Management Systems that can help lead to value creation and value extraction to help in methodical assessment of IP quantitatively and qualitatively.
  • Leveraging IP Assets for business growth and share/implement best strategies that help organisation’s decision-making processes. Value of existing and prospective assets is measured, contributing to decision-making in cases of collaboration, acquisition, and merger in the corporate world.

We at IIPRD initiate Intellectual Property (IP) Audit processes by reviewing existing IP Policies, Standards, Controls, Compliance Procedures, and Practices of the Customer. Based on the review, assets are typically classified based on their nature i.e. as statutory or non-statutory IP assets. Statutory assets include patents, copyrights, trademarks, plant varieties, and geographical indications, whereas non-statutory rights include technical know-how, technical information, brands, tradenames, trade dress, client information etc. After the step, critical analysis and comprehensive discussions are done on existing IP Portfolio of the Corporate, and extensive timeline-based policy changes, transformations, and activities are charted out to ensure a steady and robust growth in the IP Portfolio of the Company keeping in mind twofold mandate of enforceability and commercialization capability.

We at IIPRD also play a critical role in organisation’s decision-making processes in case of transfer and licensing arrangements to third parties. We carry out meticulous scrutiny of IP portfolios through preparation of comprehensive reports.

As it is said, individual character can influence organisation’s growth as well the nature of an organisation shapes the individual. IIPRD works through this mantra wherein the organisation and its dedicated workforce work hand-in-hand towards meeting their diverse requirements and objectives. IIPRD Professionals are well acquainted with the nitty-gritties of strategizing and decision making, and forecast possible risks while recommending such decisions.

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