Home > Topics > Institutional Policies and Strategies > Conducting IP Audits > Editor's Summary, Implications and Best Practices

This chapter provides a clear, concise, pragmatic overview of IP audits, defined as the comprehensive assessment of an institute’s IP assets (for example, the intellectual property actually owned by the institute) and liabilities (for example, third party intellectual property that is held by the institute). The importance of IP audits is becoming more and more apparent; they are increasingly affecting how public institutions view and manage intellectual property. Indeed, some governments and donors now actively require an audit as part of their support and funding.

The IP audit seeks to accomplish two broad objectives for an institution: first, it seeks to identify the intellectual property generated by its researchers. This intellectual property is an asset, with value that the institute needs to identify, assess, and manage. Second, an audit seeks to identify and manage the intellectual property of third parties that passes through its doors, so as to avoid any liability for misuse of that intellectual property. The IP audit is thus a systematic, methodical identification of the intellectual property within the institute. As the chapter shows, the audit follows a procedure, from start to finish, so that at the audit’s conclusion the institute’s managers know what assets and potential liabilities are present.

Therefore, the objective of an IP audit is to:

• identify relevant intellectual property,
• establish the ownership of that intellectual property,
• establish any procedures for the management of that intellectual property, and
• contribute to the formulation and execution of the IP Policy of the research institute.

Procedurally, the audit may be conducted through:

• on-line surveys of senior administrative and research staff,
• follow-up face-to-face interviews with those staff,
• analysis of contracts, MTAs and other documents held at the central administration,
• reviews of laboratory notebooks and related research records,
• reviews of computer files,
• analysis of relevant documents identified through interviews,
• and (perhaps to the point of being obnoxious) asking questions, follow-up questions, and then follow-up to the follow-up questions, that is, to dig, dig, and dig for information.

A research institute’s ownership and control over any intellectual property will depend upon its legal capacity as an entity; in other words, is it incorporated? Typically, a research institute will be incorporated under the law of the host country. As part of the audit, these documents should be scrutinized to see what powers the institute has to own and deal with intellectual property. They will also set out the powers of relevant officers of the institute to enter into transactions on behalf of the corporation, that is, their capacity as agents. Once invested with the legal power to exercise dominion over intellectual property, the institute will then have the power to engage in contracts with its employees as to who owns what.

The IP audit should also scrutinize the IP policy of the institute, if indeed there is one. It should ask questions, such as: Where is it posted? What does it say? Are new employees required to read it? Also, ownership via contracts with the institute, versus ownership through payment, may be addressed in the IP policy. For example, would paying an institute for research work mean that the institute owns the research, and not the organization paying the bill (for services)? These are all important questions that the IP audit should seek to resolve.

An IP audit identifies all the intellectual property generated by the research institute, whether existing in registered or unregistered form. This requires the analysis of questionnaires completed by management and research staff, as well as the examination of contracts, MTAs, licenses, collaboration agreements, memoranda of understanding, collaborative work plans, employment contracts, and other legal arrangements.

The institute’s intellectual property may be in the form of:

• Patentable biological assets, such as germplasm resources, DNA libraries and enabling technologies (marker genes, probes),
• Technological know-how
• Confidential information
• Patents, utility models and industrial design rights in equipment
• Copyright (data base rights, computer programs and databases)
• Publications
• CD-ROMs
• Video materials
• Online materials
• Trademarks
• Confidential information, such as research data, and
• Biodiversity rights.

Third-party intellectual property within the institute may be in the form of patents and know-how associated with biological technologies that are then in-licensed for use in the institute. Most research institutes will execute such third-party proprietary technology licenses. Salient features of such third-party licenses include:

• permissible use of the licensed material confined to scientific research,
• confidentiality of licensed material to be preserved,
• all information concerning improvements in the material, or inventions associated with the material to be reported to the licensor,
• research progress to be reported periodically,
• use of material only by identified institute scientists, and
• advance copies of manuscripts of publications to be provided to the licensor.

Other third-party IP rights may be associated with equipment utilized by the research institute. A number of research equipment items obtained from commercial suppliers may generate IP obligations; for example, the Bio-Rad Biolistic PDS-1000/He apparatus is often supplied subject to an agreement that it be used “for research purposes only.” The Hybaid PCR Express Thermal Cycler is also supplied subject to a license “to practice the PCR process for internal research and development.”

The various obligations imposed by these agreements with third parties emphasize the importance of an IP management facility at a research institute. Hence, an IP audit may also scrutinize IP management structures within the institute. It should consider the adequacy of these structures and related procedures, particularly in terms of the awareness of the IP obligations of the staff and of the institutional mechanisms for dealing with both the institute’s and third-party intellectual property.

Key Implications and Best Practices

Given that IP management is heavily context specific, these Key Implications and Best Practices are intended as starting points to be adapted to specific needs and circumstances.

For Government Policymakers

• Research institutes in a country should have the resources (human, institutional, and physical) to adequately assess, organize, and manage the intellectual property that is within their institutes. This means appropriate and sustained levels of financial support for human and institutional capacity building. Only then will the research institutes in a country be able to carry out complex IP management, such as IP audits.

For Senior Management (university president, R&D manager, etc)

• An institute should provide guidance to all staff, including faculty, students, research personnel, and administrators, about what the institutional IP policy is, how intellectual property should be handled, what are the obligations and responsibilities of employees, and who can claim ownership of intellectual property.
• Employees, including staff, scientists and graduate students, should be required to attend IP awareness training sessions. This way, everyone will be on board. When the next IP audit is conducted, there will be far fewer unexpected, and unwanted, surprises.

For Scientists

• It is important to understand the basics of IP ownership, for example the different types of IP rights such as patents, trade secrets and copyrights.
• Be aware of the intellectual property that is in your and your staff’s possession, whether it is owned by your institute or is owned by another (third-party intellectual property).
• It is important to understand the IP policy of your institute in order to more clearly understand and know what IP rights your institute holds or will hold pursuant to your program’s activities. The institutional IP policy is the foundation for the IP management system at an institute.
• Keeping good lab notebooks and research records, in line with the institute’s notebook policy guidelines, is likely the single best way for you and your program to keep track of intellectual property.
• It is important to know when to, and when not to, disclose information that might have potential value as intellectual property (for example, patentable inventions).
• If you have questions, ask your technology transfer office for help … immediately; don’t wait until something unpleasant is discovered during an IP audit.
• When there is an IP audit, fully cooperate with the auditors. They are working for the institute’s, and your, best interests. Your input will be critically important.

For Technology Transfer Officers

• You will be central to the actual implementation of an IP audit. Therefore, a clearly described, step-by-step, procedural checklist for conducting the IP audit is helpful.
• Maintain good relationships with your institute’s staff, with special focus on the research personnel. When you conduct an IP audit, you want them to view you as a friend and colleague, and not as some sort of “IP policeman.”
• To cultivate good will with your institute’s research staff, organize, mandate and conduct engaging educational programs in IP training and awareness, including overviews of your institute’s IP policy, and related IP management (for example, correct research record keeping, interactions with both internal and external colleagues, and using materials from outside of your institute).