Conducting an Intellectual Property Audit

Eow Khean Fatt provides some tips on how to protect your Intellectual Property




Broadly speaking, intellectual property ("IP") is the result of one’s intellectual effort and creativity. Many things we use in our daily lives are the result of someone’s invention, creation and intellectual effort.


Intellectual property rights ("IPR") usually refer to laws on patent, copyright, trademark, industrial designs, confidential information and trade secrets.


Most companies own some form of IP that is important to their operations. At times, some companies may not even realise that they have IP. IP can be simple information such as list of customers. Due to diverse types of IP and the circumstances surrounding its coming into place, it may sometimes be difficult for a business owner to be fully aware of its IP. As such an IP audit can help overcome this.




Ideally an IP audit should be conducted by IP professionals but you may conduct a preliminary IP audit within your company to get an overview of your IP. IP audits are usually undertaken for the following reasons:



When buying or selling businesses and acquiring IP assets

Before making any acquisitions, an IP audit or due diligence ought to be conducted. Such an exercise will help to identify the target company’s IP assets and liabilities, and assist in determining the value of the business.



Joint ventures

If you are considering entering into a joint venture which will use some IP of your proposed partners, you should verify that your partners have the necessary IP ownership before entering into a joint venture agreement. A comprehensive IP audit will help establish this.



To enforce or defend your IPR

Usually, in an IP infringement case in court, the first thing that a plaintiff needs to establish is ownership of its IP. This may sound simple enough but IP ownership can be caught in a wrangle of issues which may destroy the plaintiff’s case.


For example, a business owner may not have obtained trade mark registration in respect of his brand of goods but intends to initiate legal action against a third party for passing off. In such case, the business would have to provide evidence of substantial sales and promotion of his goods under the particular brand. Failure to prove substantial reputation and goodwill may prove fatal in a passing off litigation case.


An IP audit would help to determine whether the Plaintiff has the necessary evidence to support a case in passing off.  Therefore the steps to be taken are as follows:


(a) thoroughly evaluate the extent of your rights and assess the certainty with which they can be enforced; and

(b) review the evidence which establishes that the rights exist and that you own them.


If you have registered any trade marks, you may wish to safeguard them by regularly reviewing the trade mark gazettes or instruct your lawyer to maintain a trade mark watch.



To avoid infringing third party IPR

There may be instances where you are uncertain whether you infringe third party rights. When conducting an IP audit to determine whether you are infringing third party rights, preliminary online searches may be conducted through major IP databases of the United States of America, United Kingdom and Australia. It is advisable to seek the services of an IP practitioner to conduct a more comprehensive check.




Below is a sample checklist to assist you in identifying and protecting your IP. Please note it is only a sample checklist and is not meant to be exhaustive.


(a) Do you have any registered trade marks, designs or patents?

(b) If so, do you know when they are due for renewal?

(c) Do you own the IP you are using and would you be able to prove it?

(d) Do you have license agreements pertaining to your use of IP owned by third parties or the use by third parties of IP owned by you?

(e) Who wrote and designed your marketing and promotional materials, such as brochures? Were these done in-house or did you obtain the services of a graphic designer or professional writer? If you used external contractors, did their contracts specify who owns the IP that was created?

(f) Do you know what are the processes or information which are critical to your business? Are such processes and information unique to your business? If so, are they protected?

(g) Do you have signed agreements with key personnel, contractors, consultants or other external suppliers which assign any IP they develop, when working for you, to your business?

(h) Do you have valuable customer lists or databases?

(i) Does your organisation have policies and procedures in place specifically to manage and protect your IP?


If your company’s core business involves the creation or use of IP, such as advertising agencies or software development, it is important to educate your employees so that everyone can collectively ensure that the company’s IPR is properly protected, managed and eventually commercialised. Even if IP is not your company’s core asset, it is worth educating your staff so that they will not infringe the IP of others.


On a larger scale, a business owner should always bear in mind the various stages of development, protection, management and commercialisation of all IP in the business.


An IP audit may even identify some IP assets which you did not know your company possess.


At the end of the audit process, it is advisable to have an IP portfolio to ensure that all your IP are properly recorded and maintained. Consequently, you can develop policies and procedures to ensure that each time you create or use new IP, it can be identified and effectively maintained and protected.


IP audits should be conducted periodically to help keep your IP portfolio updated.



EOW KHEAN FATT ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )



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