Know What You Have (IP Audit) and What the Other Guy Has (Competitive Intelligence)

• Author: Alexander I. Poltorak/Paul J. Lerner
• Profession: Is the founder, Chairman, and CEO of General Patent Corporation (GPC), an intellectual property (IP) firm focusing on intellectual property strategy and valuation, IP licensing, and enforcement/Is the Senior Vice President and General Counsel of General Patent Corporation (GPC)
• Pages: 54-69

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CHAPTER 4

Know What You Have

(IP Audit) and What

the Other Guy Has

(Competitive

Intelligence)

After reading this chapter you will be able to:

Know the goals of an intellectual property (IP) audit.

Understand the advantages conferred by having an outside

organization (rather than in-house personnel) perform the

IP audit.

Identify core, noncore, and useless patents in your portfolio.

Gain useful information about your competitors’ business and

product plans through monitoring their patents and patent

applications.

Understand patent mapping’s advantages and limitations.

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The Intellectual Property Audit

Often a firm does not know, or may not fully appreciate, the scope

and applicability of its intellectual property. To paraphrase one business

executive, ‘‘Had we known then what we know now, we would be

twice the size.’’ The means to correct this lack of knowledge is an intel-

lectual property audit.

An IP audit has several goals:

To identify all of the intellectual property a firm may possess.

To ensure that all identified property is properly assigned and

protected.

To identify those intellectual assets that are worth protecting,

thereby converting them into intellectual property.

To identify any gaps in the systematic extraction of knowledge and

conversion of intellectual capital into intellectual assets.

To identify any gaps, proble ms, or failure s in the procedures

followed by a firm in identifying and safeguarding such assets.

The audit can, theoretically, either be performed by an outside orga-

nization, such as an intellectual property law firm or intellectual prop-

erty management firm, or be done in-house. While the in-house

approach offers a clear advantage (it’s free), it is almost always the worse

choice. Essentially, doing an effective audit in-house requires that the

personnel involved either (1) admit to their own shortcomings and mis-

takes (not likely) or (2) point out the shortcomings and mistakes of

their colleagues (everyone knows where that leads). Let the professionals

handle it—it’s worth the cost.

Typically, at the commencement of the audit, the auditors will sub-

mit a detailed list of questions to be answered by the firm being audited

(hereafter the auditee). Submission of this questionnaire is often followed

by a meeting with liaison personnel and key executives of the auditee,

where the questions are discussed and answered.

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