An intellectual property audit, or IP audit, is a structured review of the intellectual property your business owns, uses, and licenses. It answers three questions: what you have, whether you actually own it, and whether it is protected. Most businesses benefit from an IP audit before a sale, investment, product launch, or expansion, and periodically in between.
Your business may own more intellectual property than you realize. In addition to patents and trademarks, IP may include software, website content, product designs, confidential processes, and other valuable business information. But do you actually know who legally owns these assets, whether they are adequately protected, or how they support your business? An experienced attorney can conduct an IP audit to help you protect your work and make better business decisions.
What Is an IP Audit?
An IP audit is a systematic review of the intellectual property your business owns or uses. It identifies your assets, confirms ownership, evaluates protection, and checks how each asset supports your business. These assets may include trademarks, copyrights, patents, domain names, social media accounts, trade secrets, product designs, and technical know-how.
An IP audit can also uncover assets you overlooked, ownership disputes, expired or lapsing registrations, gaps in protection, or intellectual property your business uses without the required permission.
Why Do You Need an IP Audit?
First, an audit can help protect your business from avoidable disputes. Say a contractor created your website or software. Do your agreements establish who owns the work? Paying for a project does not automatically make you the owner of the intellectual property in it. Under the Copyright Act, copyright belongs to the author unless the work is a “work made for hire” (17 U.S.C. § 201). An employee’s work created within the scope of employment is a work made for hire. A contractor’s work qualifies only if it falls into one of nine specific categories, such as a contribution to a collective work or a compilation, and both parties sign a written agreement saying it is a work made for hire (17 U.S.C. § 101). Custom software and most website work do not fit those categories. That means a paid contractor generally keeps the copyright unless there is a signed, written assignment (17 U.S.C. § 204(a)). We discuss how these gaps surface in deals in our post on IP assignment mistakes that derail startup acquisitions.
Second, an audit can reveal opportunities to generate income. You may be able to license your trademark, software, or other protected assets to another business. An understanding of your portfolio helps you decide which assets to protect and commercialize. For a closer look at structuring those arrangements, see our article on IP licensing considerations for ecommerce businesses.
Third, an audit helps when you are seeking investment or selling your business. Buyers and investors want evidence that the business owns the IP it claims. Clear, organized records make due diligence easier and support the value of your business.
When Should Your Business Conduct an IP Audit?
An audit can be useful at any stage of a business. However, it can be particularly valuable before the following events:
- A merger, acquisition, or business sale: An audit helps confirm ownership and identify problems before negotiations progress. Buyers will ask for this information during the sale of a business, and problems found early are cheaper to fix.
- An investment or funding round: An IP audit prepares you to explain which intellectual property supports your business and growth plans.
- A product launch: You can review your protection and identify potential conflicts with other parties’ rights before you commit to a name, design, or feature.
- Expansion: You can check whether your trademarks and other rights are protected in your target markets, including foreign countries where U.S. registrations offer no protection.
- A major business change: An IP audit may help you review your portfolio after an acquisition, new product development, a key employee departure, or a significant change in operations.
What Happens During an IP Audit?
The process begins with a discussion about your business, products, and existing protections. Your attorney may review registration records, employment and contractor agreements, licenses, confidentiality agreements, and other relevant documents.
Then the audit itself happens. Ownership, protection, use, and potential risks are assessed asset by asset. The resulting report should identify gaps and recommend practical steps, such as obtaining missing assignments, filing maintenance documents, registering key marks, or exploring licensing opportunities.
Ownership and Chain of Title
The audit traces each important asset back to its creator and confirms that rights passed to the company in writing. That includes founder work created before the company was formed, contractor deliverables, and employee inventions. Gaps are usually fixed with confirmatory assignments. Our copyright attorneys frequently handle these cleanups.
Trademark Registration Status and Deadlines
Federal trademark registrations require upkeep. The owner must file a declaration of use (a Section 8 declaration) between the fifth and sixth years after registration, and again with each renewal in the year before every 10-year anniversary (15 U.S.C. §§ 1058, 1059). Each deadline has a six-month grace period with an added fee. Miss it, and the USPTO cancels the registration. The audit should also confirm that the registrant is the correct legal entity and that the goods and services listed match current use. Our trademark attorneys can docket these dates for you.
Recorded Assignments
If a patent or trademark changed hands, the assignment should be recorded with the USPTO. An unrecorded assignment can be void against a later purchaser who paid value without notice, unless it is recorded within three months of its date or before the later purchase (35 U.S.C. § 261; 15 U.S.C. § 1060(a)(4)).
Trade Secret Protection Measures
Under the Defend Trade Secrets Act, information qualifies as a trade secret only if the owner has taken reasonable measures to keep it secret and it derives value from not being generally known (18 U.S.C. § 1839(3)). An audit checks whether you actually do this: nondisclosure agreements, access controls, confidentiality markings, and exit procedures for departing employees. Our trade secret attorneys can help close gaps.
Patents and Maintenance Fees
Utility patents require maintenance fees at 3.5, 7.5, and 11.5 years after grant, with a six-month grace period and surcharge (35 U.S.C. § 41(b)). If a fee is not paid, the patent expires. Design and plant patents have no maintenance fees.
Software, Open Source, and Licenses
For software companies, the audit should inventory open-source components and their license terms. Some licenses require you to share source code or provide attribution when you distribute the software. The audit also reviews licenses in (software, fonts, images, and content you use) and licenses out (rights you grant to customers and partners) for scope, exclusivity, term, and termination.
IP Audit Checklist
A practical intellectual property audit typically covers the following:
- List every trademark, logo, product name, and slogan, and note which are registered and in which countries.
- Calendar Section 8 declarations, renewals, and patent maintenance fee dates.
- Confirm that registrations are owned by the correct entity, not a founder or former affiliate.
- Collect signed invention and copyright assignments from founders, employees, and contractors.
- Check contractor agreements for work made for hire language and a backup assignment clause.
- Confirm that domain names, social media handles, app store accounts, and code repositories are held by the company, not by an individual.
- Review nondisclosure agreements, access controls, and exit procedures that protect trade secrets.
- Inventory open-source components and confirm license compliance.
- Review licenses in and out for scope, exclusivity, term, and termination rights.
- Confirm that patent and trademark assignments have been recorded with the USPTO.
- Look for third-party marks or works that could conflict with your products or brand.
Frequently Asked Questions
How often should a business conduct an IP audit?
There is no legal requirement to audit on a fixed schedule. Many businesses benefit from a full intellectual property audit every few years and a lighter review once a year, plus a targeted audit before a sale, financing, product launch, or expansion into new markets.
Does paying a contractor mean my business owns the work?
Not necessarily. Copyright belongs to the author unless the work is a work made for hire or the author signs a written assignment. A contractor’s work qualifies as a work made for hire only if it falls into one of nine statutory categories and both parties sign a written agreement saying so. Custom software and most website work do not fit those categories, so a written assignment is usually needed.
What happens if a trademark maintenance deadline is missed?
The USPTO will cancel a registration if the owner does not file the required Section 8 declaration of use between the fifth and sixth years after registration, or the renewal filings at each 10-year mark. The law allows a six-month grace period with an added fee. After that, the registration is lost and the owner must generally file a new application.
Is an IP audit only for large companies?
No. Small and mid-sized businesses often have the biggest gaps, such as a logo designed by a freelancer with no assignment, a domain name registered to a former employee, or confidential information shared without a nondisclosure agreement. A scaled audit can focus on the assets that matter most to the business.
Contact the Intellectual Property Attorneys at Revision Legal
For more information about an IP audit for your business, contact the experienced intellectual property attorneys at Revision Legal. You can reach us through our contact page or call (855) 473-8474.
This post is general information and is not legal advice.
