The Ultimate Guide to Intellectual Property Audits
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 intellectual property protection 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.
In recognition of World IP Day on April 26, we thought that there is no better time than the present to have a simple, practical overview on why businesses should be ensuring that they have a solid understanding of their intellectual property rights and how an IP audit can improve overall IP management to gain greater value from their intangible assets.
IP Management in the Digital Age
World IP Day was originally established by the World Intellectual Property Organization (WIPO) back in 2000 to “raise awareness of how patents, copyright, trademarks and designs impact on daily life”. Since then, the subject of IP has taken on even greater importance as organisations have been increasingly implementing new technologies in their quest to remain competitive in today’s digital economy.
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.
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
Even when you are certain that your own IP is protected, it is important to establish what exactly is your intellectual property and what is that of a third party.
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). 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
All businesses, regardless of sector or size, must be cautious when it comes to IP management as this increasingly defines an organisation and determines its future. Its brand, know-how, trade secrets, innovations, research, client lists, software, etc., each has its own legal regime affording protection.
However, 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 Know Your Software IP Audit
Vaultinum’s Know Your Software 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.
Through the Know Your Software IP Audit, 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.
To celebrate World IP Day, Vaultinum is offering a 25% discount on its IP Audit solution from 26th April until 31st May
But how can organisations check for potential open-source issues in their software?
Vaultinum’s Know Your Software Tech Due Diligence reviews both the actual code itself and the internal operational and development processes in order to reduce and avoid legal, reputational, and business risks that open-source code can bring.
Know Your Software Tech Due Diligence includes:
- Know Your Software Online Assessment, an online self-audit which analyses intellectual property management and ownership
- Know Your Software Code Audit, an in-depth software source code scan providing a thorough risk analysis of the software asset, which is then evaluated by IT experts
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.