Presentation on theme: "WIPO Asia Sub-Regional on the Use of IP by SME Support Institutions for the Promotion of Competitiveness of SMEs in the Food Processing Sector Lahore,"— Presentation transcript:
1 WIPO Asia Sub-Regional on the Use of IP by SME Support Institutions for the Promotion of Competitiveness of SMEs in the Food Processing Sector Lahore, Pakistan, June 5 and 6, Guriqbal Singh Jaiya Director SMEs Division, WIPO
2 Intellectual Property Audits What is an IP auditWhy do an IP auditWhen should an IP audit be doneWho should do an IP auditHow should an IP audit be doneAfter an IP audit
3 1. Intellectual Property Rights Innovative products/processesCultural, artistic and literary worksCreative designsDistinctive signsMicrochipsGoods of a given quality due to its geographical originConfidential business informationPatents or utility modelsCopyright and related designsIndustrial design rightsTrademark, Collective markLayout-designs or topographies of integrated circuits.Geographical indicationsTrade secrets
6 2. What is IP Audit?In the knowledge economy intangibles have taken center stageLike tangible assets IP has to be identified, protected and maintained tomaximize their value andminimize the potential for third party abuseprevent inadvertent lossensure freedom to operateIP audit is a review involving the identification of the IP owned, used or acquired by a business, its management, maintenance, exploitation and enforcement
7 3. Why do an IP audit Enables a company to identify its IP assets Make decisions with respect to those assets;whether rights have been or should be acquired for them,whether they are or should be maintained,how best they could be exploited,are there any redundancies,threats to those rights, infringements of others rights etc..It will include assets created by the company itself, others that are acquired or used with or without the express license of third parties.It will enable the company to see where, if any, ownership problems exist, why they exist and what should be done to prevent or solve such ownership issues.It will also reveal whether adequate systems are in place to protect these assets or, alternatively, whether and what internal obstacles exist to their protection, and whether and how these may be overcome.Identify, organize, and review existing IP portfolioQuantify the value of IP assetsResolve current issues in IP management practicesEstablish procedures to ensure protection of assets in the futureBetter guarding of trade secretsDocketing system for payment of fees and renewal filingsAssignments of IP in employment and consulting agreementsBetter marking of productsAdd value the company
8 Importance of IP Assets The overall importance of IP assets to the business will have a bearing on the audit.Where IP assets are relatively unimportant to the nature of the business as a whole, it might be sufficient merely to confirm that registered IP rights are in good standing and are held in the name of the company.Where the company’s principal assets are IP, it may be necessary to conduct a more thorough assessment of the company’s IP portfolio and IP based activities.
9 4. When to do an IP audit General purpose IP Audit; Event driven IP audit;Limited purpose focused audits
10 General Purpose IP Audit Before establishing a new company.It is always important for a start-up company to be aware of intangible assets it owns or needs to protect.When a business is considering implementing new policies, standards, or procedures relating to IP.When a business is considering implementing a new marketing approach or direction, or is planning a major reorganization of the company.When a new person becomes responsible for IP management
11 Event Driven IP AuditAn “event driven” IP audit is often called IP due diligence when done to assess the value and risk of a target company’s IP assets.IP due diligence is a part of a comprehensive due diligence audit that is done to assess the financial, commercial and legal risks linked to a target company’s IP portfolio, typically before it is bought or invested in.It can provide detailed information that may affect the price or other key elements of a proposed transaction or even aborting the further consideration of the proposed transaction.An IP audit provides a basis for assessing the risk and value of relevant IP assets in a proposed acquisition or sale of intellectual property, as for example, prior to entering into any serious negotiations for a possible merger or acquisition, divestiture, or entering into a joint venture arrangement.It could lead to a significant increase in the value of the acquired company or the resulting merged entity.It may significantly reduce the acquisition cost or lead to a cancellation of the acquisition process if the due diligence process reveals major IP risks or IP problems in the target company, which is proposed to be acquired.
12 Event driven IP AuditBefore entering into a financial transaction involving IPBuying or selling a division, product lineLicensingBankruptcyIP disputesOutsourcing
13 Limited purpose focused audits Personnel turnoverBefore a major personnel turnover of in-house R&D or marketing staff, especially if they are disgruntled employees.Foreign IP filingsBefore a company takes up an aggressive program of filing IP applications in other countries for entering a new market abroad or expanding overseas through off-shoring/outsourcing.Before having an Internet presencehelps it to identify the needs of e-commerce and registration of appropriate domain names, etc.Significant changes in IP law and practiceClean room procedures: The clean room procedure seeks to avoid infringement by ensuring that there is no “access” to copyrighted expression of unrelated parties during a software development project. Thus, an audit might be necessary to institute, or to review the adequacy of, clean room procedures used in the development of software products so as to reduce the risk of infringing third party copyright.
14 5. Who should perform an IP Audit? Company personnel (in-house counsel, management)Outside counsel who have experience with such audits in the particular industry, in IP management issues
15 6. How to do an IP Audit? Define an audit plan Define a schedule for the auditDefine responsibilities among the audit teamBackground research for preparing an audit planInternal and external relations and interactions:Who does the company regularly interacts, or intends to interact, with: such as its employees, vendors, customers, consultants, independent contractors, joint venture partners, competitors, etc and what role(s) do(es) IP actually play, or would play, in these interactions?
16 An Audit PlanPrepare a check list modified for the type and size of the company’s business, IP laws, purpose and desired outcome of the auditInclude a list of the documents to be reviewedlicense agreements, distribution agreements, government contracts, employee and consultant agreements, journal articles, published papers, competitive analysis documents, marketing files, patents, lab notebooks, assignments…The specific areas of the business to be coveredDefine the personnel to be interviewedAttorneys, Brand managers/marketing, those responsible for websites, R & D Personnel (employment agreements and policies), Graphic designersPrepare questionnaireA good checklist minimizes the chances of leaving out one or more relevant steps from the process. Each member of the audit team should be provided the relevant part of the detailed checklist.To produce a comprehensive, company-wide IP audit report reflecting the entire development and decision-making process for each of the company’s products and processes, the audit team should collect, review, and organize not only the IP information but also all the agreements that may affect the IP portfolio of the company. It may also have to do or get done
17 Auditing agreements Licensing agreements: Assignment agreements:. Employment and independent Contractor agreementsJoint venture agreements:Government contractsTechnology transfer, or know how, or technical assistance agreementsDesign and development agreementsSettlement agreementsFranchise agreementsRoyalty agreementsMarketing agreementsDistribution/Distributorship agreementsReview all licensing agreements to ensure that the company is continually in compliance with the terms of such licenses and whether they further the current and future business plans of the company.Review assignments to determine whether the company was granted an assignment from every inventor or author of a work and whether the license was exclusive. Contact all licensors and assignors to determine whether any security interests or liens have been granted in the IP assetsProvisions governing the transfer of the IP rights from employees or contractors to the companyTerms and conditions under which an independent contractor is allowed to use any copyrighted materials or rely on trademark association with the businessThe scope of the assignment itselfProvisions regarding a waiver of moral rights in all copyright worksClauses setting restrictions on the disclosure or use of confidential information during or after the completion or termination of the employment/contractProvisions defining the employees’ continuous obligation to assist in the protection of the IP rightsThe extent, scope and enforceability of non-compete and non-solicitation provisionsWho owns the IP assets pre-dating or created through the joint venture or collaborationDefine a system for identifying protectable intellectual property resulting from the cooperationIdentify who pays for any application for registration of IP rights and any subsequent defense of the IP rightsDetermine the scope of IP contributed to the joint ventureDetermine which IP rights can be used by whom when the joint venture or collaboration ends.Within each agreement close attention should be paid to:Duty to assign, to maintain trade secrets, non-competeEncumbrances in security agreements, financing statements,title retention agreements, other documents creating a lien,security interest or similar interest
18 Intellectual Property Rights Innovative products/processesCultural, artistic and literary worksCreative designsDistinctive signsMicrochipsGoods of a given quality due to its geographical originConfidential business informationPatents or utility modelsCopyright and related designsIndustrial design rightsTrademark, Collective markLayout-designsGeographical indicationsTrade secrets
19 7. After an IP audit Catalog of IP assets Have rights been acquired, if not should they be (cost benefit analysis), if they have been acquired are they been properly maintainedOwnership issues; does the company own these assets? Are there infringement issues (license/design around)? has title not been properly assigned by employees/consultantsStrategic issues; are these assets being properly managed and exploited within the strategic objectives of the company. Are there restrictions to their useReport on patentable technologies currently not protected, Copyright, trademark registration applications to be filed, Affidavits of continued use of trademarks, Maintenance fees to keep patents in force
20 Strategic issuesAfter an IP audit, the management matches its newly established inventory of IP assets to its strategic business objectives.A possible technique is to divide:Techniques, innovations, and ideas that are essential to your products and services, and to the markets your company has decided to serveIntellectual assets of real potential but not to your companyAssets’ that seem, on balance, to have no great value to your company or to anyone else
21 Business strategy formulation How would the assets that have been identified as essential to the business of the company be better utilized in marketing its goods and services in the relevant marketsHow would the assets with potential be usedWhat would one do with the other `assets’The results of the IP audit may add a new dimension to its strategy discussions and may lead to new business strategies
22 From IP audit to IP asset management The audit team could evolve into a permanent IP asset management team overseen by a senior executive and charged with managing the knowledge portfolio. The team could be composed of managers from various disciplines who understand the firm’s intellectual assets.
23 Create an IP culture – Respect for IP Create an IP culture – Respect for IP. Training on IP best practices for all staff. Training programs to include content on IP asset management.Review the existence and adequacy of IP asset management policies, procedures and practices within a company and verify that they are effectively communicated to all the employees.
24 Building value through IP management IP asset creation.Reducing costs of third-party IP claims.Building value from product markets using IP assets.Creating non-core revenue streams.Creating additional revenue through core business licensing.Reducing costs of unused IP assets.Receiving tax deductions for IP asset donations.
25 Reducing new product development costs Evaluating the IP assets of an acquisition or investment target (due diligence).Assessing business direction and strength.Discovering unclaimed business opportunities.Discovering business expansion opportunities
27 Consequences of not managing IP assets Failing to protect assetsInfringing others assetsduplication of efforts to redevelop existing needsloss of potential benefits (revenue, reputation, industry development) from failing to commercializelow moral and stifle innovation