World Intellectual Property Organization

Auditing Your Intellectual Property

One way your SME may acquire a better position to capitalize on the potential benefits of its IP assets and extract their full value is by conducting an IP audit. Ideally, this should be done by professional IP auditors, but often a preliminary IP audit may be done within your company. This entails identifying, monitoring, valuing your SME’s IP assets so as to make sure that you are making the most out of them. By doing so, your SME would be able to make informed decisions when it comes to:

  • Acquiring IP assets - Knowledge of your company’s intellectual property and of its value will assist you in deciding which type of IP rights to acquire and maintain, and how best to manage the IP assets of your SME (see “How Can Your SME Acquire and Maintain Intellectual Property Protection?” and “Managing the Intellectual Property Assets of Your SME)
  • Mergers and acquisitions -  Good knowledge of what IP assets your SME owns can lead to a significant increase in the value of your SME. This is because investors would value a company on the basis of their expectations of future profits, which may, to a considerable extent, be based on the exploitation of IP rights.
  • Licensing - Your SME can increase its cash flow (revenue) by licensing out its IP rights to a third party (see “Licensing of Intellectual Property. A Vital Component of the Business Strategy of Your SME”). An IP audit will assist your SME in determining the value of your own IP in order to obtain maximum benefit from license agreements.  The revenue resulting therefrom has the potential of increasing the market value of your SME.
  • Collateral - A well-structured IP portfolio may, in certain circumstances, also be used as collateral. In such cases lenders will use your IP assets to determine the credit worthiness of your SME (see “Can Your SME Use Intellectual Property Assets for Financing?”).
  • Enforcement - Knowing the value of your IP assets will assist your SME in taking decisions on whether it is worthwhile taking action against infringement and in what way this may be done on a case by case basis.
  • Cost reduction - A well managed IP register would help you identify obsolete IP assets (thus enabling you to cut-down IP asset maintenance costs), avoid infringing other peoples IP rights, etc. This would undoubtedly lead to a reduction in costs.

By establishing a culture of identifying and cultivating IP assets and strategically using them, an enterprise can increase its revenue, have an edge over its competitors and position itself well in the market; these are strategies that may lead to an increased market value of your SME.

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