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Importance of IP Audits for Corporates: An Overview

Importance of IP Audits
| Updated: Nov 17, 2021 | Category: IPR

Nowadays, Intellectual property rights have become the most valuable and a productive Tool for the Corporates. In this complex and competitive business world, protection related to Intellectual property is the requirement for entities and new business startups. Intellectual property is known as Intellectual assets, Patents, Trademarks, Copyright, design and circuit layouts, etc. The success and failures of any business today depend upon the effective management of Intellectual property rights worldwide. As a result, conducting Intellectual Property Audits is to assess the company’s present and future intellectual assets by establishing a successful and effective Intellectual Property Asset Management System. These audits would reveal and recommend a systematic strategy to the administration, protection, and utilization of intellectual property. Scroll down to check the importance of IP audits in companies.

What is IP Audit?

IP audit is one of the practical and systematic tool to review IP assets that a company hold. In simple terms, IP audit means the process which examines the company’s IP assets. Although this may appear to be a simple operation, it contains facts that the organization may not know. The IP audit is not restricted to effective review tools, but it also provides essential competitive information in the IP’s sphere of operation in which the IP deals. The Importance of IP audits for corporate is scrutinizing of IP that the company holds. Another purpose of the IP audit is to provide the techniques, strategy, and products that contribute to the company’s profitability. The company can select which assets are useless and which are essential to the company’s survival. The company can determine how to organize asset management and assess it based on that. Consequently, the outcome of an IP audit assists in the organization of IP evaluation.

Why to Conduct IP Audits?

Companies contain different forms of Intellectual property[1], which are essential to their business operations. Intellectual property management is restricted to patents, Trademarks, design, and copyrights and manages other Company proprietary rights, including client lists, databases, and financial information, among other things. Companies control and manage Intellectual property.

Importance of IP audits for Corporates

The importance of conducting the IP audit for Corporates is to assess, Preserve and strengthen IP, detect and correct different types of IP, identify the risks of a company’s offerings infringing on another company’s intellectual property, and put in place the most influential IP management methods. IP audits help to enhance the value of existing IP; it also helps recognize the roadblocks, and to prevent expensive disputes, they make commercial transactions more straightforward and more efficient.

Advantages of exercising IP audit

  • Improve the worth of the company – Knowing what IP assets your company possesses may help you increase the value of your company dramatically. Investors value a company based on the anticipation of future earnings, which are frequently predicated to a large degree on the effective exploitation of intellectual property assets.
  • Reduce new product development expenses by avoiding having to replicate IP that already exists.
  • Efficiently and effectively gain new IP assets – if a company understands that IP assets the company-owned, the company will not buy new IP assets that are redundant and hence superfluous. For example, if an organization is unaware of customized software written by its employees, it may needlessly license third-party proprietary software. It may also buy IP assets that compete with existing IP assets rather than complementing them.
  • It helps increase borrowing power in some circumstances; a well-managed IP portfolio may be utilized as collateral to boost creditworthiness and raise the organization’s borrowing capacity. Create value for stakeholders by recognizing new IP and making the successful utilization of both existing and new IP easier. Gain a competitive advantage over competitors through increasing revenue.
  • IP audit helps manage IP- An organization can decide how to manage its intellectual property effectively.
  • IP audit helps protect the company’s IP– Through knowing your IP, you can decide whether to preserve or share it. It also increases your chances of successfully taking action against infringement.
  • It helps in enabling and implementing an effective IP strategy.
  • By not keeping outdated IP assets, an organization may be able to save money. Knowing what IP assets exist can help an organization avoid infringing on other people’s IP rights.

Kinds of IP Audits

IP Audit is classified into two types-

  1. General Audit– Usually performed as part of a general audit that a company should do regularly to review and evaluate the worth of its assets.
  2. Specific Audit– Generally performed to identify and determine the vital region, which might be about a present right or a right obtained in the near future.

Conclusion

In conclusion, we would like you to understand that since time has passed, it has made us recognize that intangible assets have gradually become a vital element of the economic value and knowledge. The importance of IP audits for Corporates is more required for the overall growth of a company. IP audit is one of the effective and systematic tools to review IP assets that a company hold. In simple terms, IP audit means the process which examines the company’s IP assets. IP audit is cost-effective same undertaken by an outsourcing business might result in considerable cost savings. Unquestionably, the outcome of an IP audit may assist the company in adding a new dimension of strategy, therefore building a stronger market position.

Read our Article:Delhi High Court New Rulings On Fast-Track IPR Issues

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Siddharth has completed his graduation in law (BA. LLB) from Guru Gobind Singh Indraprastha University. He has a keen interest in doing extensive research and writing on legal subjects, especially on Civil, criminal and corporate Law. He is a creative thinker and has a great interest in exploring legal subjects.

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