The Value of an Intellectual Property Audit

"Given the current business environment, in which the value of a company and its competitive advantages are likely heavily dependent upon its intellectual property, it is crucial that a company take reasonable steps to make sure it has rights to its important intellectual property and that it properly protects said property.

By conducting periodic audits of its intellectual property, a company can ensure that this property is adequately protected to preserve the company's earnings and growth potential resulting from the intellectual property. The audit can identify if there are areas in which the company should improve its intellectual property protection or if the company is potentially infringing a third party's intellectual property.

Further, if a company is a party to almost any transaction with another company that involves or affects intellectual property (whether in the sale of its assets or stock, in an investment or public offering, a joint venture, licensing or otherwise), the other party to that transaction will likely perform due diligence on the company's intellectual property to determine what intellectual property the company owns or has rights to use and the value of such intellectual property.

Prior to such time, the selling party should conduct due diligence on itself to make sure that its intellectual property is in order and the representations and warranties that it will make in the transaction are accurate."

Read more in this article from Vedder, Price, Kaufman & Kammholz via Mondaq.