Most of us finish the year feeling bogged down by the work we didn’t quite get around to. Fortunately, the new year offers the promise of a fresh start making December the perfect time to set achievable goals. Why not finish the year with an audit of your IP portfolio, so you can plan your maintenance, consolidation and enhancement projects for the months ahead.

If you're looking to put yourself in a position to get your new year off to a good start, then you could do worse than ending 2018 with an audit of your IP portfolio. Frequently bloated with unused registrations or starved by gaps in coverage, a thorough audit of your IP could help you to identify ways to streamline and exploit your portfolio, saving you money while also improving the efficiency of your assets.

Where to begin

Many companies estimate the healthiness and relative worth of their IP portfolios based on size alone. However, those IP rights will be worth far less if the following checks and balances aren't also considered. We find that many companies can reduce their spending on IP matters and ring-fence the strength of their rights by auditing their IP portfolios, using the following three-step process.

Step 1: Review your IP records and data for accuracy

The data in your IP portfolio needs to be accurate and up-to-date, otherwise you may find that you don't quite own the rights that you think you do. Taking the time now to cleanse, update and rationalise your IP data can save you both time and money in the long-run, as it will identify potentially costly errors in the records.

As we have written previously, the extent to which companies are diligent in the maintenance of IP and IP records can vary considerably. If a company has followed best practice, either as a matter of ongoing routine or as part of an acquisition or sale, then the portfolio should be in good shape. If rights have not been kept up-to-date, however, then they are likely at risk in terms of validity and enforceability.

Of course, updating records is generally a time-consuming and often costly process, bound as it is by the cleanliness of the existing records and the vagaries of each jurisdiction’s recordal system. However, there are steps that companies can and should follow to smooth the process and minimise the demands on their internal resources. To achieve this, the audit should ideally answer the following questions in relation to the IP assets being acquired:

  • Exactly which entity is recorded as the owner of each right?
  • What is the status?
  • Are the rights in force?
  • Are licences in force and recorded against any rights?
  • Are charges or other interests recorded against any rights?
  • Do the registered rights match those used in the business?
  • Are there any unregistered rights?

Obtaining the answers to these questions in advance enables effective planning for any record updates that are required.

Step 2: Audit your IP portfolio for value – and efficiency

The next step of the IP audit is to assess the value of your portfolio against the costs involved in growing and maintaining the IP rights it contains. It helps to identify, for example, patent and trademark rights that are being renewed despite never being used, as well as gaps in protection, which might leave a company exposed.

To undertake this part of the audit, we would first recommend:

  • Reviewing your IP strategy to ensure that it takes into account your strategic business goals;
  • Prioritising your IP rights (e.g. between ‘core’ and ‘non-core’), and markets (countries and goods/services) based on current branding/R&D strategy and future plans;
  • Auditing licensing and royalty agreements to ensure that the rights have been correctly maintained and the revenues received; and
  • Reviewing your supplier list to see if it is possible to generate further cost savings by consolidating your IP portfolio with one provider.

With plans for Brexit seemingly quickening their pace, now is also a good time to start identifying any rights that may be impacted by the UK’s exit from the EU. Although both the EU and the UK government are both putting forward a solution whereby EUTM and design rights are cloned automatically (and at no charge) to equivalent UK rights, there is still much that is to be tackled. Even if the agreed Draft Withdrawal Agreement gets through UK parliament and the rest of the EU-27 (which will be no mean feat), there are still issues to be resolved when it comes to how international trademark and design rights, unregistered Community designs and ongoing legal disputes, involving EU trademarks and registered or unregistered Community designs, will be managed post-Brexit.

Knowing which of your rights – including unregistered rights, and associated IP assets, such as contracts and licensing for example – are likely to be affected is the crucial first step to putting a strategy in place to ensure your rights aren’t affected once Brexit is complete. (For additional guidance, please see our white paper ‘Brexit - what does it mean for your IP?’ or subscribe to our IP newsletter ‘Perspectives’ to ensure you receive future updates)

Step 3: Put a timeline in place for regular IP health-checks

Completing an IP audit is only the first step in what should be a regular programme of portfolio reviews. By conducting audits at regular intervals (ideally at least every six months), you can ensure that your portfolio continues to evolve as your business does, and it could also identify additional savings in the future; for example, by:

  • Merging registrations;
  • Allowing possible duplicate (local) registrations to lapse; and
  • Identifying unexploited rights that could be sold, licensed or allowed to lapse.

This last step will also be crucial in light of possible changes to trademarks, patents and designs in the EU in the future.

Future challenges

While it is important to identify, protect and enforce the IP rights that already exist in your business; it’s just as crucial to identify those rights and territories that will become important in the future. For an overview of future challenges and key geographies, as well as additional advice on setting up a trademark strategy that is fit for your business’s future, read our article: ‘Best practices in trademark management: setting the strategy’.

If you are faced with budget cuts next year and don’t know where to start, an audit is also the perfect opportunity to put in place a risk-based maintenance/abandonment strategy to drive IP creation and annuity payments. (For additional guidance on this, see our article ‘Patent annuities: when and what to renew’ or contact us to find out if you’re currently paying too much for your annuities service.)

Likewise, if you’re finding it a struggle to manage your network of suppliers or need to reduce costs, an audit of the work you undertake and who actually carries it out, will provide the data and knowledge needed to take steps to begin to consolidate your network and approach. (For additional guidance on this, download our white paper ‘Best practices in trademark management: a practical guide’, which also compares and contrasts the in-house, outsourced and hybrid approaches to IP management.)