THE INTELLECTUAL PROPERTY AUDIT
By Jonathan N. Osder
(2000)

In today’s high technology business world, much of a company’s value resides in its intangible assets. It is therefore important that a company develop a system by which it can continually monitor, maintain and protect its various intellectual property rights. Performing an “intellectual property audit” allows a company to assess the scope of its intellectual property rights, discern and address any potential defects in those rights, and fashion the required systematic procedures to protect and perfect its valuable intangible property. 

The following is a brief explanation of the various legal protections afforded to basic intellectual property. If you believe your company has intellectual property that qualifies for one or more of these protections, you should discuss the best ways to protect your rights with an experienced intellectual property attorney. 

Copyrights

Copyright law protects writings and other forms of expression. To be the subject of copyright, the work must be both original and fixed in a “tangible medium of expression” capable of being discerned by someone directly or through a machine. The owner of a copyrighted work has the exclusive right to duplicate, distribute, produce derivatives of, display and perform the work. 

Patents 

An inventor may obtain a patent on any new and useful process, machine, manufacture or composition of matter, or any new and useful improvement thereof. Although a patent is the most difficult and expensive of all the intellectual property rights to obtain, it offers its owner the greatest protection. A patent owner has the right to exclude others from making, using or selling an invention without a license. 

Trade Secrets 

State trade secret laws offer protection to almost any device or information (such as a formula, database, method of operation or material) that is used within a company’s business and gives the company an economic advantage over its competitors. There are no applications, filings or other procedures required to obtain trade secret protection. Rather, the crucial factors in establishing such protection are whether a company invokes “reasonable measures” to maintain the secrecy of its competitive information and whether such information is in fact secret. 

Trademarks 

Trademark law protects names, words, phrases, and designs that indicate the source or origin of a product or service. A trademark may be protected under both federal and state law. Ownership of trademarks typically vests according to the actual use of the marks. Maximum trademark protection is afforded by federal law, under which a company may register its qualifying marks by undergoing an application process with the 
Patent and Trademark Office in Washington, D.C. 
The following is a preliminary list of questions that will help you evaluate your needs for the best type of protection for the various intangible property you may own. After reviewing these questions, you may wish to consult an experienced intellectual property 
attorney to protect your rights concerning the intangible property. 

Are there any products currently being developed by the company, for which it anticipates requiring a copyright registration or which may be patentable? Does the company wish to register any words, phrases, logos or other symbols identifying any of its products or services for trademark protection? Does the company have a system in place by which it monitors the use of any of its licensed intangible property, as well as any infringing uses of such property by third parties? Does the company employ any independent contractors or consultants to develop intangible property and if so, were those contractors required to sign an agreement stating the company was the owner of any intangible property the contractors helped develop? Does the Company require its employees to sign nondisclosure agreements and/or invention assignment agreements of any sort?

As technology continues to improve, the intellectual property owned by a company will become as valuable as, if not more valuable than, the traditional assets listed on the company’s balance sheet. Without the proper protection and the diligent enforcement of one’s ownership rights, the time and resources spent on developing these assets can be lost.

The author wishes to acknowledge Steven B. Matlin for his contribution to this article.

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