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The IP Management Audit: Start Top-down, Then Across

~Andy Gibbs, Excerpt Essentials of Patents (John Wiley)

Are the holes plugged? Are strategists and tacticians ready for defensive action? Offensive action? Is intellectual capital being created, captured and commercialized … throughout your organization?

Are the holes plugged? Are strategists and tacticians ready for defensive action? Offensive action? Is intellectual capital being created, captured and commercialized … throughout your organization?

With more than 80% of the market capitalization of the Fortune 500 based in intellectual property, one would certainly hope that corporate wide attention is being paid to every aspect of intellectual property management.

But “hope” doesn’t cut it. Policy, practice and performance are all that matters.

So how does your company’s IP management system stack up? It might be time for an audit.

Who should direct an audit?

  • Corporate counsel / IP counsel
  • CEOs
  • CFO (they need to report to the shareholders)
  • R&D managers
  • Law Firms (remember the old adage: “the cobbler’s kid goes without shoes.”)
  • Venture Capital Firms (are the portfolio companies paying adequate attention to IP?)

Who gets audited?

IP is threaded throughout the organization, although different organizations emphasize various IP differently.

Nevertheless, an audit should extend into:

  • Legal Department (our outside counsel)
  • R&D Department \
  • Human Resources
  • Information Technology (IT department)
  • Marketing & Sales
  • Shipping and Distribution
  • Manufacturing
  • Customer / Client Services
  • Finance and Operations
  • M&A, and Business Development

The deliverables resulting from an audit (or Qualitative Intellectual Property Benchmarking Report), should provide recommendations, identify shortcomings, highlight acceptable or current industry standard intellectual property practices, all intended to help senior-level executives shape a corporate-wide Intellectual Property Best Practices program.

The Checklist

The IP audit manager needs a starting point – the what, where, who and how of initiating a company-wide intellectual property management audit.

I’ve compiled a short Checklist that should be expanded or refined for each organization. Once the audit manager has a solid program outline, the audit can begin --- and that audit will likely pave the way for corporate or investment policy changes in the future.

1. Patent Quality Management™ in the Enterprise
1.1 CEO’s role in "top-down" deployment of the IP audit.
1.2 The Intellectual Capital Officer (ICO) as the chief IP executive.
1.3 IP management program to create wealth and enhanced shareholder value.
1.4 Aggressive IP tactics, strategy and management.

2. PQM Management Team Development
2.1 Objectives and responsibilities of the corporate IP management team.
2.2 Appointment of senior executives as IP management team members.
2.3 Fostering "bottom-up" flow of innovation through the organization.
2.4 Team performance monitoring and improvement systems.


3. Patent Quality Management™ for Human Resources
3.1 Policies and employment agreements to capture intellectual capital.
3.2 Employee recognition programs to promote innovation.
3.3 Patent Quality Management training systems.
3.4 Recruiting, screening and retaining prolific inventors.

4. Patent Quality Management™ for Manufacturing
4.1 Patentability of manufacturing / production systems and processes.
4.2 Migrating shop floor invention disclosures to the PQM Team.
4.3 Purchase orders, IP ownership, and vendor / supplier management.
4.4 Invention assignments provisions in collective bargaining agreements.

5. Patent Quality Management™ for Engineering / R&D
5.1 Reading patents to enhance State-of the-art awareness.
5.2 Invention disclosure & patent development workflow systems.
5.3 Records development and retention policies.
5.4 Reverse engineering for infringement, patentability, freedom to operate.
5.5 Transitioning R&D from Cost Center to Profit Center via licensing.

6. Patent Quality Management™ for Marketing & Sales
6.1 Linking competitive product strategy to patent strategy.
6.2 Patent-centric analysis of competitors’ R&D investment focus.
6.3 Industry new product and technology trending.
6.4 Managing the outside patent / invention submission process.

7. Patent Quality Management™ for Corporate Counsel
7.1 Developing corporate-wide tactical and strategic patent practices.
7.2 Introduction to emerging IT solutions for enterprise IP management.
7.3 Assessing competitors’ IP position before budgeting new R&D projects.
7.4 Press release, product introduction and technical disclosure review.

8. Patent Quality Management™ for Finance / M&A
8.1 Compliance with FAS 142 intangible asset accounting requirements.
8.2 Patent & portfolio valuation systems.
8.3 Establishing and managing departmental PQM/IP budgets.
8.4 Patent acquisition and licensing in/out alternatives.

9. Patent Quality Management™ for Information Technology
9.1 Supporting emerging patent & trademark e-filing solutions.
9.2 Maintaining the intellectual capital knowledge base.
9.3 Server / client patent information & data analysis solutions.
9.4 IT-wide defensive / offensive copyright and patent awareness.

10. Identifying Need & Managing Outside IP Consultants
10.1 Augmenting internal expertise with outside experts.
10.2 Managing budgets and scope of work of IP consultants.
10.3 Identifying appropriate expertise in support of a PQM program.
10.4 Need-to-know information disclosure policies.

11. Implementing Patent Quality Management™ Tools
11.1 Deploying a corporate-wide Intellectual Property Information Portal.
11.2 Web-distributed software for patent search and analysis.
11.3 Assessing collaboration, work flow, docketing and KM software.
11.4 Administering intranet, extranet, Internet and web-based solutions.

I hope this outline has been useful – if for no other benefit than identifying one or two audit points that may have been overlooked in an already established program.