A Checklist to Software IP Audits
As a tech company, your intellectual property (IP) is one of your most valuable assets and can account for up to 80% of your business’s value. It is, therefore, crucial to make sure that your Intellectual property is well protected and well managed. When it comes to software and tech assets, you want to make sure that these assets are safe from copy or theft and that, if your software includes any use of open source, the way you have used it is compliant with the open source's license T&Cs.
By conducting a Software IP Audit, you will be able to assess how well you’re doing and if your IP risks are under control. Whether you’re a company looking to self-audit or whether you’re an investor looking into an M&A opportunity, diving deep into the software will allow you to reveal potential IP risks and fix them before it's too late.
What is an IP Audit?
An IP audit is a comprehensive review of a company's intellectual property portfolio, including patents, trademarks, copyrights, and trade secrets. It involves evaluating the strength of your IP, identifying any potential infringement risks, and implementing strategies to protect your IP. A full IP audit will look at contracts, IP ownership, registrations etc to make sure that the company owns its IP assets and that they are contractually well managed.
When evaluating the IP of a Tech company that develops software, the assessor will also need to look into the source code itself, which is hard to do if you are not a tech expert. The assessment will evaluate both the proprietary part of the software as well as the open source components.
Why are Software IP Audits Important?
A Software IP Audit is vital to ensure that a company's software is compliant with all applicable laws and regulations, including Open Source licenses. There are considerable legal risks associated with Open Source software due to the licensing requirements that may sometimes, depending on the type of Open Source, mandate the distribution of software under identical terms. Non-compliance with such terms can lead to expensive legal battles and harm the reputation of the organisation.
Before you invest in a full IP Audit, here are a few elements that you can check yourself, to have an idea of how well your business is doing in terms of IP management.
Identify Your Intellectual Property Assets
The first step in conducting an IP Audit is to identify all your IP assets. This includes all software code, patents, trademarks, copyrights, and trade secrets that your company owns or has the right to use.
Once you have identified your IP assets, you should assess their strength and value. This involves evaluating the scope of protection they offer, their market value, and their potential for infringement.
Evaluate Open Source Risks
Open Source software can be a great resource for companies looking to develop new software products. However, it also poses potential risks to your IP. When using Open Source software, it is essential to:
- ensure that all Open Source software used in your products is properly documented,
- read the license agreements carefully to ensure that you are not infringing on any intellectual property rights,
- document any modifications made to the code.
Review Licensing Agreements
Licensing agreements are critical in protecting your IP rights. When conducting an IP audit, you should review all the licensing agreements you have with your clients to ensure that they are up to date and enforceable. The last thing you want is to realise that you have been transferring IP to your client through a badly written license agreement.
As already discussed above, don’t forget to evaluate any licensing agreements for third-party software used in your products, such as open source, to ensure that you are complying with all the terms and conditions.
Conduct a Copyright Analysis
One area where IP audits can be particularly useful is in protecting IP copyright. Copyrights protect original works of authorship and include software source code and data bases. In the digital age, protecting copyrighted material from theft and piracy has become increasingly challenging but not impossible. Even though copyright does not require any action to be protected (whereas brands or patents do), it is usually highly recommended for software source code to be timestamped from the very beginning. Being able to produce an unforgeable date of creation is the only way to protect your author’s rights in case of litigation. Vaultinum’s deposits provide this proof in just a few clicks.
Through an IP audit, businesses can identify any gaps in the protection of their copyrighted material and take steps to protect their rights. This can include implementing digital rights management technologies, pursuing legal action against infringers, or depositing their copyrighted material with third parties like Vaultinum.
Implement strategies to protect your IP
In addition to legal protection, businesses can also implement technical measures such as data encryption, firewalls, and access controls to safeguard their intellectual property from cyber threats.
Even though a simple IP audit will not tell you whether your technical setup is strong enough to prevent cyber attacks, a source code analysis will also reveal cyber vulnerabilities and give you recommendations on what you need to do to strengthen your cyber defenses.
In conclusion, regular IP audits are essential for any technology organization to protect IP rights and prevent future litigation. For Companies that develop software, IP audits will also look at databases and include a deep dive into the software’s source code. This can get very technical so it's better to run that type of audits with a specialist that has a double expertise in IT and IP.
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