An intellectual property audit: a key tool for every business

By Jean G. Vidal-Font, Senior Member Attorney at Ferraiuoli LLC

This article was originally published in Spanish in Microjuris.

The truth is that every business has intellectual property assets and in many times more than one type of asset: trademarks, copyrights, business secrets, patents and/or image rights. Therefore, it is important that all businesses always carry out not only accounting and financial audits, but also an intellectual property audit.

Take a retail business as an example. One might think that their main asset is the merchandise they sell, but there is much more. First of all, the business is advertised in the market with a name and possibly a distinctive slogan, both of which are intellectual property assets under the Trademark Law in Puerto Rico and/or in the United States.

Is therefore important to have an intellectual property audit to document since when such brands are used and demonstrate their use in market in possible trademark infringement cases against competitors. Advertisements must also be preserved, since, in the future, they may be a key player in those litigations.

Likewise, other business may be producing computer codes (in cases of business with programmers), art (advertising agencies), textiles, literature, and/or other creations susceptible of copyright protection. In these cases the intellectual property audit is key to document who was the person behind such creations and based on what contract or employment relationship they were created, since those details are crucial to establish who is the owner of the creation. It usually happens that the business wrongly thinks it owns the intellectual property rights.

The same happens with inventions (patents) and/or trade secrets. Every document that proves the creation of an invention or a business secret (a confidential list of clients, secret recipes or formulas) must be properly displayed and owned by the business to maximize its use. Lack of actions in this matter can result in the loss of important intellectual property rights in a competitive world of innovation.

So how do we proceed? The first thing is to know your business well, and know who is producing or creating material or information that may be subject to intellectual property protection. The second thing is to have a clear understanding of the contractual relationships with employees. After these two steps are completed, the intellectual property audit speeds up.

Sadly, many businesses grasp the relevance of these steps only after they have already started a lawsuit over intellectual property rights. Intellectual property auditing should be a key and dynamic tool for any business.