IPR-Types of IP Audit

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Intellectual property (IP) refers to creations of the mind – everything from works of art to inventions, computer programs to trademarks and other commercial signs.

The term intellectual property has come to be internationally recognized as covering patents, industrial designs, copyright, trade marks, industrial know – how and confidential information.

Patents, designs and trade marks used to be considered as different kinds of ‘industrial property’, but when the concept of copyrights and confidential information came into the picture, it was changed to ‘intellectual property.’

The nature of intellectual property, of whichever species, is of intangible incorporate property.

In each and every case, it consists of a bundle of rights in relation to certain kind of material objects created by the owner of the said.

Patent rights are created by statute and governed by The Patents Act 1970 (India).

In the case of Industrial Designs the property consists in the exclusive right to apply the design registered under The Designs Act, 1911 which is now replaced by The Designs Act, 2000, by a necessary amendment.

In the case of Trade Mark, there are two types of rights. One of them is conferred by registration under The Trade and Merchandise Marks Act, 1958 which is now replaced by The Trade Marks Act, 1999.

The other one is acquired in relation to a trade mark, trade name or get-up by actual use in relation to some product or service.

Intellectual property (IP) refers to creations of the mind – everything from works of art to inventions, computer programs to trademarks and other commercial signs.


Protection of IPR allows the innovator, brand owner, patent holder and copyright holder to benefit from his/her work, labour and investment, which does not mean monopoly of the intellect. Such rights are set out in the International Declaration of Human Rights, which provides for the right to benefit from the protection of the moral and physical interests resulting from the right holder’s work; literal or artistic product.


Audit is the examination or inspection of various books of accounts by an auditor followed by physical checking of inventory to make sure that all departments are following documented system of recording transactions. It is done to ascertain the accuracy of financial statements provided by the organisation.

An intellectual property (IP) audit is a tool for identifying your potential IP assets. Ideally an audit should be carried out by professional IP auditors, but often a preliminary audit can be done in-house, within your company.

With an IP Audit it is easier to keep a track of the inventory of the potential Intellectual property assets.


· It is a systematic review of the IP assets owned, used or acquired by an organisation or a business.

· The main objective of IP audit for an organisation or a business is to:

- Uncover unused or underutilisedassets;

- Determine ownership of these assets.

- Identify any related threats that is Intellectual Property infringement from our end or by others.

· Intellectual Property Audit helps an organisation take corrective actions and in responding properly when an IP is infringed.

· IP Audit helps in effectively and efficiently utilisingthe Intellectual Property.

· It helps take decisions regarding any kind of organisation’s mergers and acquisitions.


There are generally three types of IP Audit:

I. General Purpose IP Audit

II. Event Driven IP Audit

III. Limited Purpose Focused IP Audit

The purpose of each Audit differs with organisations and organisations.

I. General Purpose IP Audit:

This is broadest type of IP audit, used by new companies or those considering implementing new IP policies, standards or procedures.

It is also suitable for companies implementing new marketing approaches, directions, or major reorganizations.

- Before establishing a new company, it becomes very necessary for a start-up company to be aware of intangible assets which it owns or needs to protect.

− When an organisation or a business is considering to implement new policies, standards, or procedures relating to Intellectual Property.

− When an organisation or a business is considering implementing a new marketing approach or a new direction, or is planning a major reorganization or restructuring the activities of the company.

− When a new person becomes responsible for the IP management of the organisation or a business.

II. Event Driven IP Audit:

Event Driven IP Audit is usually more narrower than the previous one, that is, the General Purpose IP Audit.

This type of Audit is also known as “IP Due Diligence.”

It is used to assess the value and risk of a company's IP assets.

the nature and scope of such an audit is determined by the event in question, and the time and resources available for doing it.

The Event Driven IP Audit is usually utilized:

- When a company or an organisation or a business wants to launch a new product.

- When considering IP licensing.

- When a company or an organisation or a business goes through bankruptcy and layoffs.

- When a company or an organisation or a business during the context of mergers or acquisitions and joint ventures.

III. Limited Purpose IP Audit:

This type of Audit is much narrower than the above two types of IP Audits.

These audits tend to be situational in nature. They are typically used to justify a certain legal position or the valuation of a particular IP.

The Limited Purpose IP Audit is usually utilisedin the context of:

- When there is a personnel turnover.

- When there are Foreign IP Fillings.

- When there are changes in IP law and practices.

- When the company or organisation or business id preparing for litigation.

- Before the company or organisation or business engages in E – Commerce.

- For the clean room procedures. The clean room procedure seeks to avoid infringement by ensuring that there is no access to copyrighted material of unrelated parties during software development project.

There are various measures which have to be looked into while preparing for an IP Audit:

· The Purpose.

· The Research.

· The Plan.

· The Checklist.

· The Contracts.