What is an IP audit and why do it?

Intellectual property (‘IP’) can drive significant value in business. Possessing registered and unregistered IP rights can be considerable assets that provide competitive advantages, as well as generating significant revenue. An IP portfolio must however be effectively managed to realise the potential of those assets.

An IP Audit is the process in which specialist IP solicitors review and evaluate your entire IP portfolio and provide you with advice about whether that portfolio is fit for the purposes of your business, and its commercial objectives. The process can also include review of any IP commercialisation (such as licensing) and/or enforcement strategies within the business.

This process should also uncover any glaring weaknesses or deficiencies in your business’ IP portfolio and provide you with recommendations as to how to address these and improve the overall effectiveness of your portfolio (in line with your commercial objectives).

In the long-term, this should also contribute to cost-savings. There are many large IP portfolios that include brands, designs and other assets that are no longer in use, or discontinued. However, companies that do not investigate this continue to pay to maintain those assets at the registry (e.g., by way of renewal), and also may face costly third party actions (such as cancellations for non-use).

When should you conduct an IP audit?

IP auditing can be useful at any time in a business’ life cycle.

Below are examples of stages of a business where they are vital:

Acquisition of a new business

If you have just acquired a business, reviewing the current IP portfolio will determine whether it is fit for purpose, and what improvements could be made to ensure you are protected and give yourself the opportunity to optimise your new IP to meet commercial objectives

Investors and lenders

Companies that are seeking to obtain financial investment from third parties should conduct an IP audit to demonstrate the desirability of your business’ IP portfolio and ensure there aren’t any flaws that are identified by the investor before you. A strong IP portfolio may also allow you to leverage these assets in obtaining credit.

Expanding your business

Companies that are seeking to expand their operations should conduct an IP audit to identify further opportunities to develop their portfolio and assets. You may be seeking to bring out a new range of products, or enter a new market, and understanding your IP portfolio in such circumstances is vital to the decision-making process.

Selling your business

Companies selling their business should conduct an IP audit to ensure there aren’t any outstanding issues that could negatively influence the business’ valuation. Doing this prior to entering into any negotiations will give you confidence, grounded in the true value of your IP portfolio.

Valuation and Commercialisation

In order to effectively assign a financial value to your IP portfolio, you will need to first conduct an IP audit to identify and evaluate the assets within it. This provides the valuation expert with a good grounding in the strength of your portfolio, allowing them to realise the full value of those assets. This may also lead to identifying further commercialisation opportunities such as licensing, and an audit and a valuation will allow you to maximise revenue in any such transaction.

JMW’s IP Team

The IP team at JMW are adept at conducting comprehensive IP audits and providing clients with bespoke and commercially focused advice in the process. The team are experts in IP protection, commercialisation and enforcement which means that when they turn to reviewing an IP portfolio, they are able to identify gaps and devise improvement strategies quickly.

The team regularly conducts IP audits of small, medium and large businesses and their portfolios. A bespoke approach is taken in respect of each client, in conjunction with the reason for the audit, and the commercial objectives being pursued. Each audit can be tailored to each client’s budget.

Financial assistance and bespoke services

Startups and SMEs may want to take advantage of the IPO’s financial assistance programme ‘IP Audit Plus’ to help facilitate the undertaking of IP audits. If you are eligible for the scheme, the IPO will contribute £2,500 towards an IP audit with a total cost of £3,000 inclusive of VAT (requiring you to only contribute £500).

To qualify for the scheme, a company must have fewer than 250 employees, and engage one of the IPO partner’s business support schemes (Innovate UK Edge, Scottish Enterprise and the Highlands and Island Enterprises, or the Welsh Government). The IPO partners will advise as to whether a business would qualify for the scheme. The IP team at JMW are in contact with these organisations and can facilitate contact for clients where required.

JMW’s specialist IP Team provides both a financially assisted and a bespoke IP audit. Whilst the financially assisted audit is limited in scope by the financial cap, our bespoke audit can provide a significantly more detailed IP audit report in both breadth and depth to deliver extensive insights on your IP rights.