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

If you're looking to get your new year off to a good start, then you could do worse than starting 2018 with an audit of your IP portfolio. Frequently bloated with unused registrations or starved with 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 ringfence 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/or enforceability.

Updating records is, in general, 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 Brexit looming up ahead, now is also a good time to start identifying those EUTM and design rights where you do not hold, but will need, a registration in the UK, and prioritising them (core/non-core) for possible action. Although organisations representing businesses’ rights, and the European Commission itself, are pushing for a solution whereby businesses do not have to double register their rights once the UK leaves the EU (on 30 March 2019, unless a transition period/alternative withdrawal period is agreed), no actual progress has been made to date. 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 the latest on Brexit, please read our story: ‘EC confirms EU IP rights will cease to apply to UK as of 30 March 2019’ and subscribe to our ezine for future updates.)

Step 3: Put a timeline in place for regular healthchecks

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. For example, when the Unitary Patent and Unified Patent Court (UPC) is finally introduced (see our FAQ: ‘How do I know if the Unitary Patent is right for me?’), and when Brexit occurs.

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 IP management: setting the strategy’.

If you are faced with budget cuts this 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’.)

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, see our article ‘A model for IP management success: out-sourced, in-house or hybrid?’)