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IP ASSET MANAGEMENT
IP AUDIT AND IP DUE DILIGENCE
BY P. KANDIAH
KASS INTERNATIONAL SDN BHD
“The IP Experts”
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IP Assets
1.
2.
3.
4.
“The IP Experts”
Name of Business / Name of Operator
Purchase price / sales price
Type of clients / purchasing practice
Seasonal demands
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Faccenda
Chicken
IP Assets
1.
2.
3.
4.
5.
6.
7.
“The IP Experts”
Name of Business
Delivery route/time
Individual client requirements
Purchase price / sales price
Seasonal demands
Sales analysis results
Confidential Information
3
MDEC
SMEs
IP Assets
1.
2.
3.
4.
5.
“The IP Experts”
Name of Business / Trade Mark(s)
Copyright in software
Hardware layout design / Industrial design
Patents (where applicable)
Confidential Information
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What are IP Assets?
Any Intangible Assets of Value / physical
assets
i)
What if the premises
are burnt down / stolen?
Physical assets (computers, servers, furniture, etc) can be
replaced
What about information contained in them?
“The IP Experts”
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ii) What if the key workers go
missing?
 Dead, resigns, walks away?
What’s in their brain?
Does it belong to them?
“The IP Experts”
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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
“The IP Experts”
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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
“The IP Experts”
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Checklist of IP Assets
1.
2.
3.
4.
5.
Patents
Trademarks
Industrial Designs
Copyright
Confidential Information e.g. customer
database
6. Work flow systems
7. Relationship with suppliers, customers, etc
8. Customer relationships
“The IP Experts”
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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.
“The IP Experts”
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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?
“The IP Experts”
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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?
“The IP Experts”
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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
“The IP Experts”
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 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
“The IP Experts”
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 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
“The IP Experts”
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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
“The IP Experts”
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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?
“The IP Experts”
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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
“The IP Experts”
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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?
“The IP Experts”
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6. Relationship with suppliers, contractors,
service providers




“The IP Experts”
IP rights of each party clearly addressed
Ensuring contracts terms are complied
Who owns jointly developed products
Ensuring they do not evolve into competitor
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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?
“The IP Experts”
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THANK YOU
P. Kandiah
Tel: 03 2284 7872
Fax: 03 2284 1125
E-mail: ipr@kass.com.my
“The IP Experts”
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