The Ultimate Guide to Intellectual Property Audits
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Think about it. You’ve taken the time and spent the money to build your business, develop your products and services, create your business methods, and establish your digital presence. Why wouldn’t you want to take the time to ensure that these integral assets are protected from unauthorised use?
This is where an IP audit comes in.
Intellectual property (IP) is an umbrella term for a set of intangible assets such as patents, software source code, brand names, trademarks, copyrights, and trade secrets. Arguably, it is the most valuable type of asset that you can own, because of how vital it is often to business operations and profitability. In 1975, IP assets represented some 17% of market value of S&P 500 companies. This then grew to be 87% by 2015, which clearly demonstrates the fundamental shift in the way stakeholders are now assessing value and protecting business assets.
It's understandable why it is now more important than ever for organisations to adopt an effective and sustainable strategy for protecting the intellectual property (IP) of their digital creations such as software, mobile applications, and websites. This is why we have written a simple, practical overview on why businesses should be ensuring that they have a solid understanding of their intellectual property rights and how by using an IP audit, they can improve their overall IP management to gain greater value from their intangible assets.
Protecting your own IP Assets
Intellectual property assets are one of the most important aspects of an organisation today. Therefore, it is important that business leaders take the right steps to ensure that it is protected. Establishing rightful ownership of your IP guarantees that others cannot benefit financially from your work without infringing your intellectual property rights. Protecting IP can be done through use of the following:
- Patents: A patent provides exclusive rights to creators of non-obvious novel ideas and solutions which have never been invented before or made public in any way.
- Trademarks: A trademark protects source identifications for products or services that are distinguishable by customers from others. This is often used for brands, logos, designs and fragrances.
- Trade Secrets: Trade secrets protect valuable confidential information that retains economic value through not being commonly known. This information can often be in the form of ingredient formulas and business processes.
- Copyrights: Copyrights protect original textual works and visual artistic expressions. This can include IP such as books, databases, software source code, artwork and music. However, to be fully protected by copyright, creators must be able to demonstrate the originality of the creation as well as the point in time that their asset came into existence. For ownership to be indisputable, depositing the asset with a trusted third party can provide unforgeable proof of the origin of the creation.
Third Party IP and Use of Open-Source Software
When it comes to the technology being used within an organisation, whether this is developed internally, acquired, or licensed from a third party or taken from open source software, it’s important that there is a solid software IP protection strategy in place that considers the rights granted to the different types of IP as well as an understanding of ownership rights.
Failure to do so comes at a great cost including potential legal costs if the IP right must be defended in court, loss of value and decreased revenue if the IP right is found to be insufficient or invalid.
For example, when hiring an outside source to create elements for your business, such as graphics, written content, coding, websites, etc, ownership does not automatically transfer to the company who purchases the created work. This is something that needs to be explicitly stated in a contract, confirming that the creator gives their rights to that work to the organisation.
Businesses also open themselves up to third party IP violations simply by hiring new employees who could be bringing on board trade secrets from their previous roles, highlighting the importance of reinforcing (sometimes in a written agreement) that they are not permitted to use any intellectual property from their old employer.
But one of the most common issues faced in relation to third party IP is that of open-source software (OSS).
Would you believe that some of the technologies that we use in our daily lives are powered by OSS? From the Android operating system to Whatsapp, OSS has become the most efficient means of launching products and replacing legacy technology.
Open-source software is software that developers can inspect, copy, modify and redistribute and is commonly practiced due to the financial and time-saving benefits that it offers the organisation. However, businesses need to be aware of OSS licensing T&Cs before using and integrating OSS to their own code. Specific rules apply to the use of most open-source code, such as the requirement to make the source code public and these constraints may trigger legal, reputational, and business risks.
Performing an IP Audit
It's not uncommon that many smaller businesses feel that they are at a disadvantage in not having the resources nor in-depth knowledge around how to identify, protect and manage their IP rights. But a great first step in identifying and understanding an organisation’s IP ownership and management rights is through conducting an IP audit.
Conducting an IP audit doesn’t have to be elaborate nor expensive, but often it does require expertise, experience, and insights that are best obtained from an independent expert.
Vaultinum’s IP Audit Solution
Vaultinum’s IP Audit is an online IP assessment tool that helps organisations highlight the effectiveness of the current management and protection of their IP and identify any areas of improvement. It also delivers organisations with a detailed action plan, developed by a team of experts in IP risk management, to remedy any issues and risks that are identified.
Vaultinum is committed to helping companies of all sizes and stages ensure that:
- Their IP is managed in such a way to facilitate growth
- Their IP rights are systematically protected and correctly enforced
- The ownership rights, including IP rights, of the creations they develop or acquire belong to them completely.
The base audit includes 3 self-assessment questionnaire which ask organisations the key questions that are necessary to highlight the effectiveness of the current management of their IP and analyses intellectual property management and ownership. Developed in alignment with international standards and best practices by a team of experts in IP risk management, the IP self-assessment delivers accurate scoring and relevant, up-to-date recommendations.
Managing OSS License Compliance with a Source Code Scan
Vaultinum’s IP audit solution offers an expert evaluation of an organisation’s technology IP management, providing users with a full report that includes scoring, contextualisation against industry benchmarks and recommendations for fixes. But it is truly the unique combination of self-assessment questionnaires and source code scan that makes Vaultinum's IP audit stand apart from the others.
Unlike traditional IP audits, Vaultinum's solution allows IP lawyers and tech businesses to review both the internal operational and development processes around intellectual property and the actual code itself, to reduce and avoid legal, reputational, and business risks that open-source code can bring. Through choosing to integrate a source code scan to an IP audit, clients are able to gain further insights into the overall code structure quality, open-source licence risks and more.
When uploading the source code to Vautinum's online platform, it is immediately encrypted using SHA256 encryption to ensure maximum security. After the scan has finished, the source code is then erased from the system- giving clients full peace of mind.
The results of both the self-assessment and source code scan are then reviewed by Vaultinum's IP audit experts, who identify areas of improvement and deliver a detailed action plan to remedy issues.
With over 45 years of experience helping clients from a wide range of industries protect their digital innovations, our team are happy to assist you with any questions you may have regarding your IP audit.
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