Conducting an “IP Audit” - An idea to find out about your IP

In this, the inaugural issue of the IP Solutions Recommendation Column, we discuss the concept of the IP Audit. This type of activity is designed to uncover the IP within you. As we have noted, many firms, both large and small, have undiscovered intellectual property that is utilized in their daily operations. As is often the case, the IP generates value to clients without any associated fees. Here we drill down to help you conduct the IP audit process in a relatively streamlined and transparent approach. There are three fundamental steps in this process. Bear in mind that the steps outlined below can be applied to a much broader set of firms and operational activities.

Step One – Review of recent project work.  In this initial step, the firm reviews the work that was completed either for a government agency or a private sector organization. The review should include both the deliverables as well as any underlying methodologies. This should not require a great deal of work, with the principal objective to determine if any submitted results or deliverables have utilized any underlying statistical or short-hand rule of approach; alternatively, whether there are any deliverables that include algorithms or statistical models. If, in either of these two situations the answer is yes, then proceed to step two.   

Step Two – Opportunities for Recurring Use.  In the second step, a determination should be made as to whether the identified capabilities can be utilized in future engagements or business transactions on a recurring basis. If the answer is yes, then the prospect for incorporating such proficiencies in future pricing is promising.   

Step Three – Determination of Future Value.  Once steps one and two have been completed, the firm must decide if there is sufficient value to warrant an explicit charge or other mechanisms for including the capability in future prices. For example, if the delivered result utilized some underlying IP, whether in the form of a proprietary set of algorithms or another process unique to the firm, then a decision can be made as to whether a charge should be assessed. Even if the deliverable consists of an algorithm or statistical model, the firm must consider whether additional work can be undertaken to enhance that model so it can provide value in a more general set of circumstances. How much is charged and under what circumstances will be the focus of our next column.  

 Will be available in the near future.