Nuts and bolts of an IP audit for a small business

Last week IP Value Wire discussed how valuation analysts can assist small business owners to develop prudent IP strategies by implementing an IP audit. Stopfakes.gov offers an outline of what goes into that audit.

An IP audit should cover the all the IP assets that are owned, licensed, or incorporated into a business's products and services. For each of these assets, the audit should determine:

• The IP the company owns, plus the IP not owned but licensed or otherwise used in the business;
• Any licenses or written permissions required for IP not owned but used;
• The type(s) of IP protection that may be available to protect each of the owned IP assets;The markets where each owned IP asset needs protection and the types of protection (and costs) available in those markets;
• The remaining useful life of each owned IP asset;
• The value of each owned IP asset to the company.                      

The value of an IP asset can be a function of:

• The contribution the asset makes to the business;
• The IP asset’s resale and license value;
• The amount invested to develop it;
• The amount the business would be willing to invest to protect or enforce against infringement;
• How much the company would have to pay to license similar IP.

Ian Cockburn, of the Pipers patent law firm in the UK, developed a template for an IP audit, found here.