The Intellectual Property Office UK (UKIPO) has recently published some updated guidance to IP practitioners when conducting IP audits, highlighting some additional areas to review concerning standards essential patents (SEPs).
The guidance is targeted at IP practitioners carrying out IP audits for SMEs under the UKIPO’s Audit scheme, which provides some funding for SMEs, but the questions are also useful for IP audits more broadly.
What is IP Audit?
IP Audit is a programme funded by the UKIPO to support SMEs at an early stage of their innovation journey. It provides targeted IP advice and support to help SMEs understand the importance of IP and help them to develop an IP strategy. The programme provides part-funding of £2,250 towards the £3,000 cost of the audit, with the SME contributing £750. The audit is then conducted by a qualified IP professional who will provide recommendations, cost projections, and a timeline for implementation, along with a follow-up meeting.
IP audits and SEPs
A SEP is a patent that is essential to the implementation of a technology standard. When undertaking an IP audit, the IP professional will explore with the SME whether it wants to consider filing applications for patents, including potential SEPs. They will also look at the standards in any products bought or sold by the SME, and any IP-relevant contracts they have in place, including those relating to SEP licensing. Third-party IP rights, including SEPs, can pose a challenge to businesses, so it’s important that these are reviewed.
Why should SMEs have an IP audit?
SEPs will be particularly important for companies developing, buying, or selling products or services compliant with standards in the Internet of Thing (IoT), such as 4G, 5G, and WiFi. There are unique challenges in the supply chains for connected IoT products as many SEP holders refuse to grant patent licences to chipset and component suppliers, leaving SMEs exposed to injunctions and demands for licence fees going back six years that they may not have been aware of, or have anticipated. Therefore, in addition to the normal review of the contractual warranties and indemnities provided by suppliers, further due diligence may be necessary by SMEs to find out if their suppliers have all of the necessary SEP licences. In some cases, SMEs may be paying twice or three times for the same SEP in the same product.
An IP audit will help to surface and draw attention to some of these issues for SMEs, so further consideration can be given to SEPs as part of their future IP strategy. Consideration can also be given to the SME taking out IP insurance.
If you have questions or concerns about the guidance, please contact Robert Pocknell.