How to Conduct an IP Audit of Your Business

Most companies cannot answer three questions quickly: what intellectual property do we own, is it actually in the company’s name, and when is the next deadline? An IP audit answers them in writing. It is not a legal opinion about the strength of each asset; it is an inventory, a title check and a calendar, in that order. Investors ask for it during diligence, buyers ask for it during an acquisition, and a competitor finds the gaps for you if nobody else does. Our IP portfolio management practice runs the audit as the first step with every new client, because every later decision depends on what it shows.

When an IP audit pays for itself

Five moments justify the effort. Before a financing round, because the data room will be asked for a schedule of IP and the assignments behind it. Before a sale or merger, because representations and warranties about IP ownership carry personal risk for the people signing them. Before a major licensing or distribution deal, because the counterparty will check that you own what you are licensing. Before entering a foreign market, because first-to-file countries reward the party that files first. And after a founder or a lead developer leaves, because that person may have taken ownership of something with them without anyone realizing.

Step 1: build the inventory

Start with a spreadsheet and four tabs.

Trademarks: every registered mark, pending application and unregistered name, logo, slogan and product name in use, with the registration number, the owner of record, the goods and services covered, and the countries. Include marks you have stopped using; those may need to be dropped from the next maintenance filing.

Copyrights: software and source code, website content, marketing materials, product manuals, photographs, training content, and anything registered with the Copyright Office. Note who created each item and under what agreement.

Trade secrets and confidential information: formulas, customer lists, pricing models, processes, and the measures that protect them. The law protects a trade secret only if you took reasonable steps to keep it secret, so the audit records the steps, not just the secret. Our trade secret protection team covers what counts as reasonable.

Domains and social media handles: every domain, the registrar, the registrant on record, the renewal date, and who controls the login. Handles are not IP in the legal sense, but losing one damages a brand as much as losing a mark. Patents, if you have any, belong on a fifth tab with patent counsel’s input.

Step 2: verify ownership and chain of title

This is where audits find problems. Compare the owner of record on each registration against the company’s current legal name. Then trace how each asset came to the company. Did the founder file the trademark personally before incorporating? Did a freelance designer create the logo, and did the contract assign it? Did an outside developer write the core of the software, and does the agreement contain a present assignment of copyright? Was the company renamed or merged, and was the change recorded with the USPTO?

Each break in the chain is a defect a buyer will price and an opponent will exploit. Our post on who owns your company’s IP explains the default rules that cause these gaps and how to cure them with confirmatory assignments.

Step 3: check deadlines and status

For each trademark, record the Section 8 window, the combined Section 8 and 9 renewal window, and the six-month grace periods. For each pending application, record any outstanding office action deadline and, for intent-to-use filings, the statement of use deadline. For foreign registrations, record the renewal date and any local use requirement. For domains, the expiration date and auto-renew status. Then confirm that someone owns each date and that the USPTO correspondence address points to a current person. The mechanics are in our guide to IP docketing; the audit’s job is to find the dates that are missing from it. Where the trademark side needs filings, our trademark renewal and maintenance team takes it from there.

Step 4: review licenses and third-party rights

Collect every agreement that touches IP in either direction. Inbound: software licenses, open-source components in your code and their license terms, stock images, fonts, and licensed brands you sell under. Outbound: distributor and reseller agreements, co-branding deals, franchise or licensing arrangements, and any customer contract that assigns IP to the customer. For each outbound trademark license, confirm it contains quality control terms and that someone actually exercises them, since a license without control can be treated as abandonment of the mark. Check nondisclosure agreements with employees and contractors, and whether the employment agreements include assignment of inventions and works.

Step 5: identify gaps and build the plan

With the inventory, title and calendar in hand, the gaps are usually obvious: a flagship product name in use but never registered; a registration that covers goods you stopped selling; a logo redesign that no longer matches the registered mark; a key foreign market with no filing; a contractor’s code with no assignment; a domain registered to a former employee. Rank them by the revenue at risk and the cost to fix, and turn the ranking into a filing and clean-up budget for the next year.

The output is a schedule of IP that you can hand to an investor’s counsel, an action list with owners and dates, and a docket that will outlast the people who built it. Repeat the audit annually or at each of the five trigger events above; a portfolio drifts out of date faster than most owners expect.

If you need a clear picture of what your company owns before a financing, a sale or a foreign launch, Capitol Law Partners can run the IP audit and turn its findings into a filing and clean-up plan. Schedule a consultation.

This article is for informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by this communication.

Attorney Cagatay Ersoy. Practical strategy for founders, investors, and growing companies.

Need help with this topic? See our IP audit and portfolio management page or schedule a consultation.