IP Due Diligence Audit

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IP Due Diligence Audit

A comprehensive IP due diligence audit contains multiple elements.  The process begins with an itemization of the full breadth of the company’s IP.  Once identified, the assets are categorized into logical groupings for evaluation purposes.  The evaluation stage includes verification of the ownership of the IP rights and assesses the IP rights in the marketplace (vis-à-vis against the strength of any competitors’ rights).  Finally, the IP audit concludes by measuring the impact/contribution of the IP on the company’s product and service offerings.

The initial inventory and triage should identify the full extent of the intellectual property and intangible assets owned and/or operated by the company. The IP portfolio may include the obvious assets, such as trademarks, patents, copyrights and domain names. However, there may be additional assets that are overlooked, ranging from 1-800 phone numbers and customer databases to trade secrets, eCommerce platforms and engineering test data.  Identification of the total spectrum of intellectual property and intangible assets supporting a company’s business operation is the foundation of a successful and comprehensive IP due diligence audit.

The following provides a look at some potential categories of intangible assets that should be considered in the evaluation of a company’s IP portfolio:

Marketing Assets

  • Corporate name and logo
  • Marketing umbrella and brand name
  • Sub-brand names and trade dress
  • Worldwide trademark registrations
  • Copyrights
  • Secondary trademarks
  • Consumer advertising
  • Package design and copyrights
  • Marketing strategy
  • Product warranties
  • Graphics
  • Promotion concepts
  • Worldwide public relations effort
  • Ad and graphics review
  • Labeling design and copyrights

 

Knowledge/Skills Assets

  • Non-compete clauses
  • Mailing lists
  • Sales knowledge
  • Proprietary MIS
  • Databases
  • Customer lists
  • Sales leads
  • Customer relations
  • Office management
  • Manuals, instructions, codes
  • Purchasing systems
  • Employee education
  • On-site training
  • Processing methods
  • Exchange of technical ideas
  • Quality control standards
  • Marketing/training
  • Trade relationship
  • International Research Clearing Center
  • Pricing policies, fee structures
  • Asset management processes
  • Regulatory agency filings and approvals
  • Security systems and processes
  • Record-keeping systems
  • Business licenses and charters
  • Customer surveys

 

Electronic Assets

  • Domain names
  • Web sites
  • Links to other web sites
  • Retail kiosk
  • Credit systems
  • Traffic controls
  • Banner ads

 

Technical Assets

  • Trade secrets
  • Formulae
  • Packaging technology and sources
  • Shapes and sizes
  • Proprietary processes
  • Key patents
  • Process technology
  • Environmental manufacturing techniques
  • Design technology
  • Technical training

 

Once the assets are identified and properly categorized, the evaluation of the portfolio can begin.  The first step in the evaluation stage is to analyze ownership. It is essential to verify ownership of these rights, as encumbrances on the assets can severely impact asset value and hamper the ability to gain maximum leverage from the assets in the marketplace.  The assets are then analyzed in the context of competing alternatives.  Insight into the competitive environment is necessary for the development of a focused, well-reasoned IP strategy.

Contact Information

info@ipmetrics.com
9320 Chesapeake Dr. Suite 110
San Diego, CA  92123
Tel. (858) 538-1533

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