The IP Experts 1 BY P. KANDIAH KASS INTERNATIONAL SDN BHD IP ASSET MANAGEMENT IP AUDIT AND IP DUE...

1“The IP Experts”

BY P. KANDIAH

KASS INTERNATIONAL SDN BHD

•

IP ASSET MANAGEMENT

IP AUDIT AND IP DUE DILIGENCE


IP Assets

1. Name of Business / Name of Operator

2. Purchase price / sales price

3. Type of clients / purchasing practice

4. Seasonal demands


IP Assets

1. Name of Business

2. Delivery route/time

3. Individual client requirements

4. Purchase price / sales price

5. Seasonal demands

6. Sales analysis results

7. Confidential Information

Faccenda Chicken


IP Assets

1. Name of Business / Trade Mark(s)

2. Copyright in software

3. Hardware layout design / Industrial design

4. Patents (where applicable)

5. Confidential Information

MDEC

SMEs


What are IP Assets?Any Intangible Assets of Value / physical assetsi) What if the premises

are burnt down / stolen?

Physical assets (computers, servers, furniture, etc) can be replaced

What about information contained in them?


ii) What if the key workers go missing?

Dead, resigns, walks away?

What’s in their brain?

Does it belong to them?


Firms do take inventory of physical assets Required by accountants / tax authorities To see whether they need replacement / upgrading

But do firms take inventory of IP Assets?

Often Not usually seen Ignorance of value of IP Assets Does not appear in Balance Sheets


IP Asset Management

Know what your IP Assets are? IP Assets not restricted to registrable rights

(e.g. patents, trademarks, industrial designs) only

Any intangible creative output that is of value to business is an IP Asset


Checklist of IP Assets

1. Patents2. Trademarks3. Industrial Designs4. Copyright5. Confidential Information e.g. customer

database6. Work flow systems7. Relationship with suppliers, customers, etc8. Customer relationships


Checklist of IP Assets (Cont’d)

9. Company policies which gives the company the competitive advantage. eg. pricing policy

10. Work culture.

11. Contractual relationships with third parties.

12. Skills of key employees.

13. Company strategies.

14. Details of research undertaken / failed research projects.


IP Due Diligence

Questions

1. Are you deriving optimum value from your IP Assets?

2. Are royalty fees due to you, properly accounted/audited?

3. What risks are you exposed to?

4. i) Are you paying royalties on expired IP rights?

ii) Are you maintaining your registered IP rights?

5. Is there infringement / passing off in the market?


IP Due Diligence (Cont’d)

6. Relationship with suppliers, contractors, service providers.

7. IP rights assessment in acquiring “new” technology.

8. Are terms of licensing agreements in respect of IP Rights duly observed by licencee?

9. Clear “Freedom to Operate” opinion in launching new products and/or in new markets obtained?


1. Optimizing value from IP Assets Licensing out to third parties – identification of

such parties? Cross-licensing of IP rights Disposing of IP Assets no longer of benefit to

you Using IP rights as a tool to gain new rights /

privileges Franchising of IP Assets


In US, nearly 40% of market value of an average company is absent from its balance sheet

In 2005, Qualcomm generated about 58% of its $5.7B in revenue from sale of Qualcomm – designed wireless chips – manufactured by third parties under contract

Since 1993, IBM has been making more than US$1B per year from licensing non-core technologies – which is otherwise unused


In 2002, Korea exported technology worth US$0.6B, imported technology worth US$2.7B through licensing, R&D sharing and Joint Venture

In US, Texas Instruments earns more from licensing its unused patent rights than from its products

50% of EU companies have no strategy for managing their IP rights beyond mere filing or renewal payment


2. Are royalty fees due to you properly accounted / audited and paid? If IP rights licensed, then need system to

ascertain royalties due?

e.g. Audited accounts,

Right to check premises / sales record


3. What risks are you exposed to? Are competitors “enclosing” you on your technology? Are you doing a competitor patent filing watch? Are you doing a competitor trademark filing watch? Would you be sued for IP rights infringement when

introducing new products / product enhancements? “Freedom to Operate” opinion obtained before

launching new products Are you in breach of any IP rights licence agreement?

- by management?- by employees?


4(i) Are you paying royalties on expired IP rights? All registrable IP rights have fixed duration:

Patents, Utility Innovation, Industrial Design Rights require annuity payments

Once registrable IP rights expire or are not maintained, value of licence falls – no “monopoly” rights in market

(ii)Are you maintaining your registered IP rights? Regular pruning of your patents, industrial

design portfolio – so “obsolete” or rights of low value are abandoned or sold to third parties


5. Is there infringement / misappropriation / passing off in the market? Surveillance in the market? Analysis of sales data to indicate abnormal

pattern Timely action taken?


6. Relationship with suppliers, contractors, service providers IP rights of each party clearly addressed Ensuring contracts terms are complied Who owns jointly developed products Ensuring they do not evolve into competitor


7. IP Rights assessment in acquiring “new” technology Is technology protected by IP rights in Malaysia,

or in country of interest? What is the scope of patent claims? Is the technology area “crowded”? Who owns the IP rights? Right to sell, grant

licence on IP rights?


THANK YOU

P. KandiahTel: 03 2284 7872Fax: 03 2284 1125

E-mail: [email protected]

The IP Experts 1 BY P. KANDIAH KASS INTERNATIONAL SDN BHD IP ASSET MANAGEMENT IP AUDIT AND IP DUE...

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