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:
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.