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6 Key Steps for the Ultimate Patent Portfolio Auditing
Patent Portfolio Auditing
A Patent Portfolio refers to all unique patents owned by a single entity. Any information concerning a patent, it’s market performance, revenue generation etc., is recorded in a Patent Portfolio. Needless to say, the Patent Portfolio is essential for efficient management of IP Property. A robust and well managed Patent Portfolio is a source of commercial and strategic gains for a company.
Just as a financial audits aid in streamlining processes, discovering risks, and maximising efficiency, a patent portfolio audit too has a meaningful impact on the viability of a business. Below we examine the 6 important steps that if followed can result in a faultless Patent Portfolio Audit.
Table of Contents
What is Patent Portfolio Audit?
A patent Portfolio Audit is a tool that allows a business to identify its IP assets and gain a valuable insight into its patent portfolio. The thorough survey covers all aspects like application status of potential patents, validity of owned and licensed patents, as well as discovering emerging patentable technologies.
Why is Patent Portfolio Audit Important?
PPA is an immensely beneficial activity that if practiced regularly can help evaluate projects by assessing their risks and advantages in line with the organisational strategy. Following are some of the benefits of a PPA:
Audits reveal significant information about the company’s IP assets and their value. It also reveals defects in patents, areas which require protection form infringement, and licensing opportunities. All this information brings valuable insights and quantifiable benefits to the company.
The PPA project selection framework is designed with well-defined criteria that averts mistakes. It also detects any budgetary miscalculations, foresees delays, and offers better decision-making parameters in general. The PPA risk management plan thus drastically reduces the room for errors and offers contingency planning to counter unforeseeable events.
One of the goals of a PPA is to eliminate projects that are inefficient and cause a drain on existing resources. By pin-pointing obsolete assets PPA helps free up resources and reduce company costs.
A PPA will identify mergers, acquisition, or JV prospects that can help monetise the patents as well as enhance their value.
Types of IP Audits
These are umbrella audits that cover a broad range of issues. They are ideal for companies looking to implement new policies or procedures.
Such audits are conducted to prepare the company for an event such as mergers, acquisitions, Joint Ventures, IPOs etc. Since these audits specifically assess the value and risk of the Patent Portfolio they are also carried out in cases of licensing, bankruptcy etc.
As the name suggests, these are very focused and situational audits. They are of use in justifying a legal position or in the valuation of specific IP assets.
6 Steps for a Successful Portfolio Patent Audit
Considering the following steps before a PPA exercise can help maximise its benefits:
1. Mergers and Acquisitions, introduction of a new product, entering a new market, etc. can trigger the need for a Patent Portfolio Audit. The objective of a PPA varies per the requirements, therefore the initial step is to outline the specific need for an audit. This step also includes defining the scope, timeline, and budget for the audit.
2. For an audit to be successful, it is crucial that the data record be accurate. It is important to ensure that all patent information is organised and arranged with the correct dates. Not abiding by this key step can cause the entire PPA to be erroneous and futile leading to loss of resources and money.
3. If the goal is to conduct regular PPAs, then drawing a schedule is extremely helpful. This will help the organisation to ensure periodic audits based on a desired schedule.
4. Next, the business areas to be covered and the expectations of all involved stakeholders need to be documented. Once this is done, an execution plan must be designed in line with the objectives.
5. Measuring the present, as well as future value of patents is an important step in the PPA process. Auditors must perform a cost-analysis to understand the benefits of renewing a patent against its current and projected value. Understandably a company would want to get rid of patents that do not contribute to revenue. This helps in trimming and optimising the patent portfolio.
6. The last and final step concerns gauging the alignment of the Patent Portfolio with the organisations’ goals and objectives. This is central to understanding if any policy amendments are needed to attain desired goals as well as in determining any decisions for future patent acquisitions/R&D developments.
The lack of a sound Patent Portfolio Management and Audit system is detrimental to the survival of a company. Intense competition and rapidly emerging technologies make it imperative that companies be aware of their Intellectual Property in order to be able to protect and expand it. Audits are an excellent tool to record and review IP related issues and enhance the IP value of an organisation.
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TT Consultants offers a range of efficient, high-quality solutions for your intellectual property management ranging from Patentability Search, Invalidation Search, FTO (Freedom to Operate), Patent Portfolio Optimization, Patent Monitoring, Patent Infringement Search, Patent Drafting & Illustrations, and much more. We provide both law firms and corporations in many industries with turnkey solutions.