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IP Audits: The unsung key to business success

IP Audits: The unsung key to business success

In light of the UK Intellectual Property Office’s recent launch of an Intellectual Property (IP) Access grant, an extension to the UK IPO Audits Plus Programme, Emma Ward, partner and solicitor heading up the contentious intellectual property team at Nelsons, discusses what IP audits are and why they are an essential part of any business looking to succeed.

As a way to support small to medium sized enterprises (SMEs) in their recovery from the Covid-19 pandemic, the new IP Access grants will see the government pay up to £5,000, which can be put towards a number of costs including professional fees, to help protect and commercialise their IP and provide them with confidence and financial support – allowing them to develop and grow securely.

What support is available?

The IP Access grant is essentially an ‘add on’ to the support that’s provided through the UK Intellectual Property Office’s IP Audit Plus Scheme. The Audit Plus Scheme provides funding of £2,500 to qualifying businesses, for use in obtaining an IP Audit.

That funding can only be used for the audit itself and cannot be used to implement any of the recommendations identified. This is where the IP Access grant comes in, businesses that have completed an audit through the IP Audit Plus Scheme could also qualify for additional funding of up to £5,000, to help implement some of the audit’s recommendations.

What is an IP audit?

An IP audit is a review of the business, focusing specifically on identifying existing intellectual property and potential opportunities to register and protect intellectual property.

Let’s look at a couple of examples, an audit might identify unregistered rights that a business was previously unaware of – such as copyright, unregistered design rights, confidential information or trade secrets – or it might find opportunities to create intellectual property, based on the work that the business is already doing – such as applying to register a design or a patent or trademark.

In both cases, that identification and creation of intellectual property could open up further business opportunities for the business by identifying opportunities to exploit the Intellectual Property Right (IPR). These could take the form of a sale or assignment, or even using the IP to secure funding. As with any other asset, IP can be mortgaged and used as security for lending, making it an incredibly valuable resource.

Why is it important for a business to do IP audits?

When used correctly, IP can be a very useful asset that can help a company gain a competitive advantage in the market. Take the example of a novel product, once it’s on the market, there will be a risk that a competitor, or competitors, will copy it.

If, prior to the product’s launch, an audit has identified the type of rights that might accrue or might be available to protect that product, for example a registered design or patent, then the business would be in a better position to claim a monopoly over that product, thereby preventing their competitor from copying it.

However, if an audit has not been undertaken and the product does get copied, while this does not necessarily mean that the business won’t have an IP right to deploy to prevent the product being copied, it’s worth bearing in mind that unregistered rights tend to be less extensive, more difficult to prove the existence of, and be of a shorter duration than registered rights.

How regularly should an IP audit be undertaken?

While once or twice every couple of years would be sufficient for most businesses, there are a number of variables that need considering, such as the sector a business operates in. For example, technology-driven companies are likely to produce IP, or the opportunities for it, at a greater rate than a law firm.

There will always be an element of training involved for the business, to ensure that they are better equipped when it comes to identifying potential intellectual property rights or the opportunities to create them in periods between audits. The business can then take external advice, as and when the opportunities arise, with subsequent audits potentially being less intensive, or identifying fewer action points, as the business becomes more familiar with IP.

Can anyone do an IP audit?

Ultimately, an expert should be brought in to conduct the audit as they will be much better placed to spot the potential to create and protect IPR. They will also be able to provide advice on the registration process, internal processes – to make sure that trade secrets are treated as such within the business, for example – and ensure that any IP created by employees belongs to the business.

Additionally, they can support with the implementation of an IP strategy, for example, what jurisdictions should registration be obtained and what registrations should be renewed or allowed to lapse.

Have IP audits become more important since the Covid-19 pandemic?

The pandemic hasn’t actually increased the importance of  IP audits. IP is important to all businesses, regardless of the pandemic. However, what we are seeing is diversification as a lot of businesses are expanding into new sectors and/or delivering their goods and services in a different way.

A particular area where this is relevant is online shopping. New apps are constantly being created and corresponding software written for those apps. In addition to the practical issues of ensuring the app works, there are also a number of intellectual property issues that may arise.

Ultimately, the importance of facilitating regular IP audits shouldn’t be downplayed as the biggest risk is the loss of opportunity – something that SMEs will be looking to embrace as they emerge from the pandemic.

For more information about how Nelsons can support with IP audits, please visit:   

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