The intellectualproperty, security andcyber arenas providegreat opportunities forevery business. However,each of these areas has itsown unique risks whichmust be understood byboth counsel and C-levelofficers. Intangibles likecopyrights, trademarks,patents, trade secrets, domain names andbrands are valuable com-pany assets. These assetscomprise the intellectualproperty (“IP”) of a company. Companies that failto appreciate and exploittheir IP waste resources,and risk losing goodwillin the marketplace.Lackadaisical supervisionof IP affects a company’sability to prevent thirdparties from unautho-rized use, copying of itsvaluable assets, and theability to defend itself, inthe event a third-partyclaims your company hasinfringed on its IP. Toprotect and maximizethe value of your IP, it isessential to keep an accu-rate inventory and havein place a system of inter-nal controls over the cre-ation, protection,management and ex-ploitation of IP. This article outlines 20 bestpractices to protect this valuable property.

WHAT? #1 At its simplest, an audit is an inventoryof assets, analysis of ownership and value,identification of procedures for protection,and analysis of compliance with proceduresfor protection.

WHY?#2 Understand the reasons for an “Audit.”Employees are more mobile than ever andloyalty seems to be a remnant of the past.The law protects the vigilant. Value is lostthrough natural carelessness. Businesses en-gage in competitive reconnaissance. Piracyis a true threat, and being wrongly accusedof piracy leads to unnecessary expense andturmoil.

#3 An “offensive approach” to an audit can

save money and maximize IP value. Anaudit can be designed and implementedwithin a controlled budget. It can assist inensuring trade secret security, confidential-ity, and statutory protection for trademarks,copyrights and patents. It can assist by avoid-ing costly, uncertain and extended litigationwhich in turn reduces expense, and the lossof managerial hours. New ventures will notbe disrupted by unexpected problems withcloudy IP ownership issues. A message issent to employees that IP is valuable to thecompany which can help preclude careless-ness or intentional loss of IP.

#4 An IP Audit can benefit owners by estab-lishing value of the IP, increasing valuethrough licensing, stopping misappropria-tion and smoothing due diligence when acompany is on the sale block. An IP Auditcan benefit investors by bench marking valuefor investing, financing and security interests.

HOW?#5 Select the right teamfor the audit. This shouldinclude trusted personnel,legal counsel, and theright technical and secu-rity team that understandsyour business and IP.Choose people who un-derstand the law in thisarea so that they are capa-ble of identifying issues.You should consider usingoutside counsel to maxi-mize the chance that theattorney-client privilegewill protect the companyif problems are discoveredthat need to be addressedby the company. Train theteam and create a roadmap for what will be re-viewed in the audit.

#6 Select the areas of IPfor the audit. At a mini-mum, trademarks, copy-right, patent and tradesecrets should be included.

TRADEMARKS#7 For a trademark audit,inventory all of the trade-marks, service marks,trade names, and com-pany names that yourcompany uses. Analyzehow each of these marks isbeing used. Look not justat the marks you believeyour company owns, but

look at all material that is being presentedto the public. This now includes advertising,websites, mobile apps, LinkedIn, Twitter, orany other new cyber-marketing tool invogue. Don’t forget to review letterhead,business cards and other traditional market-ing materials. Look for any words, phrases,pictures/logos used to identify the com-pany. Look through offices, stores, waitingrooms and the marketing department.Review and enforce the procedures to ensure that the company’s marks are beingused in conformance with the company’spolicies.

#8 Analyze any trademark licenses, andany more license agreement such as a soft-ware license agreement which often containtrademark licenses. Does the use of eachmark conform to your company’s stan-dards? Should any of the marks be retired?Is your company using any marks licensed

U S L A W www.uslaw.org SPRING/SUMMER 2014

AN AUDIT ROAD MAP

NavigatingChallenges on

the IP SuperhighwayJill Robb Ackerman, Grayson J. Derrick,and Jeffrey M. Andersen Baird Holm LLP

U S L A W www.uslaw.org SPRING/SUMMER 2014

from a third party correctly? Has your com-pany licensed any of its marks to third par-ties and are they using the marks correctly?

#9 Evaluate the registrations and the main-tenance procedures. Are all filing deadlinesrecorded for both federal and state registra-tions, if applicable? Are there any newmarks that need registered? Are there anyregistered marks that are no longer in usethat can be allowed to lapse?

COPYRIGHTS#10 Copyright protects original works ofauthorship including literary, dramatic, mu-sical, and artistic works, such as poetry, nov-els, movies, songs, computer software, andpictures. Copyright infringement is a strictliability claim, and statutory damages and at-torney’s fees can be recovered if infringe-ment occurs after registration.

#11 Two primary keys to a successful copy-right audit are to determine whether thecompany owns the copyrights on materialthat it believes it owns, and whether thecompany is improperly violating someoneelse’s copyright.

#12 Inventory all filed copyrights of thecompany. Review any materials that shouldhave copyright registrations filed and con-sider the benefits of filing. Check whetherthere are any security interests in the copy-righted works.

#13 Check whether the company has con-firmed in writing that it has rights to use allmedia used on its website. If music or tele-visions are used in public areas, confirmthat all appropriate licenses have been ob-tained. Work with IT to confirm that all ofthe company’s software is properly licensedfor the company’s actual utilization and de-ployment. Ensure that a viable procedure isin place for ongoing monitoring of copy-right compliance.

PATENTS#14 Patents give an owner a right to ex-clude others from making, using, or sellingthe invention in the country in which thepatent is obtained. The term of protectionis generally limited. For example a utilitypatent is limited to 20 years from the dateof filing. A patent audit evaluates your IPand products and also evaluates your com-petitors’ IP and products.

#15 Use the patent audit to improve yourpatent strategy by determining whetheryour patents/applications align with theproducts you sell or will be selling, or

whether your patents/applications are de-signed to block competitors.

#16 Once all of the patents are compiled inthe audit, carefully review the substance ofthe patents. Are the patents/applications toonarrowly focused? If so, you may be able tofix applications and improve future strategy.Consider the commercial and R&D appealof each patent. Determine if it makes senseto continue to maintain certain patents. Ifthe patent does not cover your product, orblock a competitor, stop paying fees.

#17 Review the company’s process for eval-uating invention disclosures to determinewhat to patent. Analyze other products tospot potential areas your products might beinfringing other’s patents. If caught at theR&D stage, you can design around to avoidpotential infringement. This will also guideyou as to the patentability of your products.Such analysis may also alert you to in-fringers. Consider whether your licensescover the patents that you want them tocover and whether the licenses are beingenforced. In contrast, analyze whether youare paying unnecessary licensing fees whenyou do not infringe.

TRADE SECRETS#18 Trade secrets can be defined simply asvaluable information not known or easily as-certainable. Trade secrets can be main-tained indefinitely if reasonable efforts aretaken to maintain secrecy. Identify the com-pany’s important trade secrets.

#19 Review and implement security meas-ures to protect the trade secrets. This in-cludes both physical and cyber security.Limit and monitor access to trade secrets.Train employees to understand the value oftrade secrets and the importance of main-taining secrecy. Review contracts that in-clude nondisclosure and covenants-not-tocompete for enforceability and coverage.Fix any problems that are uncovered.Confirm that your company is in compli-ance with all of its nondisclosure agree-ments with third parties.

INSURANCE COVERAGE#20 Finally, take time to review whetherthe company has any insurance to cover po-tential third-party claims for IP infringe-ment. If there is coverage, take time toreview the nature of the coverage. Reviewthe General Liability Policy, Errors andOmissions Policy, Riders and Endorsements,Media Liability Policy and Cyber-Risk Policy.Does the company have coverage for copy-right infringement? False advertising

claims? Claims for patent infringement? Ifthere is no coverage, analyze the risks withyour insurance professional and make a rea-soned decision whether obtaining coverageis worth the costs in light of the risks.

PRACTICAL TIP IP assets are central to the economicsuccess and growth of businesses. Thus, it isimportant for businesses to protect andmaximize those assets. By reviewing and im-plementing the best practices guidelinesoutlined above, businesses can go a longway towards ensuring that they are gettingthe most value out of their IP portfolios,and that their hard-earned, valuable assetsare protected.

Jill Robb Ackerman is apartner at Baird HolmLLP. She represents individ-uals and businesses with re-spect to complex businesslitigation in federal andstate courts and arbitrationproceedings concerning cor-

porate disputes, copyright, trademark, unfaircompetition, and computers and technology. Sheis also a frequent speaker on the perils of elec-tronic discovery and the protection of trade-marks and trade secrets. Ms. Ackerman is amember of the Nebraska State Bar and is on theBoard of Directors of USLAW NETWORK.

Jeff Andersen is a member ofthe Technology andIntellectual Property Sectionat Baird Holm LLP inOmaha, NE. He has 10years of experience in thepreparation and prosecu-tion of domestic and inter-

national patent applications. Jeff earned hisJuris Doctor from the Creighton UniversitySchool of Law in 2000.

Gray Derrick is a partner atBaird Holm LLP, and amember of the Firm'sTechnology and IntellectualProperty Section. He focuseshis practice on the develop-ment, acquisition and useof technology and other

forms of intellectual property. He handles a widerange of matters relating to various aspects ofintellectual property law, including domesticand international trademark prosecution, copy-right prosecution and resolving domain nameand other Internet-related conflicts.