A long-standing business maxim says, ‘If you can’t measure it, you can’t manage it’. This is as applicable to your intellectual property and intangible assets as anything else in your company. To manage your IP well, you have to know what it is, where it is, how it works, and whether it is doing the job intended. An IP audit, or similar form of assessment, gives you the baseline you need to get good practices in place.

This guide introduces you to the different levels of IP investigation—IP diagnostic, IP audit and IP due diligence—with an indication of when each one might be appropriate. It also sets out the nature and purpose of an intangible asset register which each of these activities can help you to create.

The guide is intended to be read in conjunction with others in this series, particularly those covering the different types of IP rights, developing an IP strategy and gathering IP intelligence.

A diagnostic can be viewed as a general ‘health check’ to ensure that a company knows what its assets are and how they are being used and maintained. An audit (a term borrowed from accounting) is a more detailed study that considers whether a business has the assets it needs in order to achieve its strategic objectives. Due diligence is an even more ‘forensic’ investigation of a company’s IP that is often directed at risk assessment—particularly in terms of ownership and litigation.

If you have a good level of business knowledge and general understanding of IP rights and how they operate, you will probably be equipped to undertake the most basic level, the IP diagnostic, yourself. By contrast, IP audits usually benefit from being conducted by an external expert. Due diligence is invariably done by a specialist in order to ensure impartiality and is not covered in detail in this guide.

The main body of this guide focuses on IP audits, which are normally the most relevant and beneficial exercises to conduct (unless you are selling or listing your company, in which case you will need due diligence). It sets out the areas the audit should cover; what is generally involved and the preparations you may wish to make; the information you will need to provide; how you can expect to benefit; and how to build the results into an effective strategy.