Intellectual Property Audit for Information Technology Service Companies

Abstract

The exploitation and evaluation of Intellectual Property (IP) in the knowledge economy is one of the greatest challenges facing IT service businesses today. It takes more than just to generate an idea - you need an effective strategy, resources and implementation and validation process to manage IP. The IT service companies cater to a wide portfolio of businesses starting from application development and maintenance to business process outsourcing services and also consulting and providing research and development services. Some of the services include performance management, quality services, testing, infrastructure services, systems integration, product engineering, business intelligence and data ware housing, business process management, product life cycle management, business process outsourcing and others. As one will appreciate that this diversified portfolio of businesses and the know-how of highly skilled people has a huge scope for the company to create intellectual assets/property for the company as well as for the customer, thereby delivering not only innovative products or solutions to the customer but providing value add to the customer. The biggest question today is made more daunting by the breadth and apparent lack of objectivity in identifying IP risks associated with these intellectual assets or intellectual property in an IT service organization. Therefore, although the importance of intellectual assets has always been significant, it is now growing at an ever increasing rate and companies have to begin to recognize the various IP risks associated with any IP or offerings for clients. In this changing atmosphere, the need for “IP Audit” for the assets that are commercialized or offered to clients has become more relevant than in the past; especially to IT service companies mainly for achieving competitive advantage to organizations. Although we know much about the need and impact for IP audit in an organization, little is known about the ways and means to identify various IP risks associated with an IT product/solution or service offerings and how to mitigate them as part of the IP audit. In the present paper, we present a strategic model of planning and conducting the IP audit for IT service offerings. The paper also talks on the various aspects/areas of IP risk management that should be considered during an IP audit and how to identify the IP risks and mitigate them appropriately.