IP audits explained

What is an IP audit? 

An IP audit is a comprehensive review of your business’s IP assets, including: 

• Registered rights: Patents, trademarks, and registered designs. 

• Unregistered rights: Copyright (e.g. software, marketing content), trade secrets, and confidential information. 

• Agreements: Licenses, NDAs, employee contracts, and joint venture terms. 

The examples given above for each type of right is not an exhaustive list.  

Each business is different and will have a range of different types and quantities of intellectual property.  

As a result of the IP audit exercise, a business becomes keenly aware of its intangible assets, as well as their exposure to the risk and opportunities it fosters, allowing them to prioritise and invest in protecting, commercialising and enforcing its IP.

 

What’s the purpose of an IP audit? 

Broadly speaking, the purpose of an IP audit is three-fold. It is a holistic legal review of the status of a business’s IP, which performs three functions: 

1. Identify ownership gaps (e.g. IP created by freelancers); 
2. Assess risks like infringement claims or lapsed registrations; and 
3. Unlock commercial opportunities (licensing, partnerships). 

Whether you’re a generic business or a business that is IP-rich and driven by your innovations—an audit will typically uncover value as well as identify vulnerabilities that can be addressed to protect underlying value. 

Myth Busting 
IP audits aren’t just for multinationals. SMEs and startups often hold undervalued IP that could attract investors or open new revenue streams. 

 

Which businesses benefit most from an IP audit? 

Whilst any business that has brands, online presence, and proprietary ways of working can benefit from an audit—certain types of business built on IP and the creation of intangible assets stand to gain the most. 

Examples of the kinds of businesses which are especially suited to an initial IP audit, or regular audits, include: 

• Startups/scaleups: Securing investment? Investors demand clarity on IP ownership. 

• SMEs: Protect innovations in crowded markets (e.g. food & beverage, fintech). 

• Tech/pharma/creative firms: IP-heavy sectors where assets drive valuation. 

• Businesses in transition: Mergers, acquisitions, or international expansion. 

• Companies with “hidden” IP: Forgotten patents, unused trademarks, or underappreciated proprietary processes. 

One of our mantras at Virtuoso Legal is “an ounce of prevention is worth a pound of cure”. We are passionate about putting clients in a proactive position when it comes to their IP.  

An IP audit is one of the best ways of doing this as it forecasts key priorities before they are urgently needed. For example, identifying, ringfencing and valuing IP before a company is set for sale; or registering key brands internationally before expansion. 

This smooths the path for businesses in their operations, removing obstacles and “road bumps” from their plans for growth. 

 

Key benefits of an IP audit 

In the best-case scenario, an IP audit will uncover a few issues that need to be addressed and offer some non-urgent opportunities and considerations for a business to consider in the medium to long term.  

Often, however, an audit can identify critical issues which might be akin to “the canary in the coal mine” for businesses—identifying barriers to planned opportunities or critical risks that could derail progress. 

There are, however, a broader range of benefits to undertaking an IP audit, including but not limited to: 

• Avoiding costly disputes: Resolve ownership or infringement issues before they spark litigation. 

• Boosting valuation: A well-managed IP portfolio can increase sale prices as intangible assets are now quantified and factored into value. 

• Providing a strategic focus: Redirect R&D spend by identifying core vs. non-core assets. 

• International compliance: Navigate post-Brexit changes to UK/EU IP laws (e.g. unregistered designs), as well as harmonisation with other regimes. 

• Investor appeal: Demonstrate rigorous IP management to secure funding. 

As such, whilst an audit requires some investment, the exercise typically uncovers value or enables opportunities that can increase value and revenue that far outweigh the upfront costs.  

In addition to this, the UK Government offer a range of financial support for businesses looking to benefit from an IP audit, which we will cover in a later section. 

 

The IP audit process: A step-by-step guide 

So, what does the process of an IP audit look like?  

At Virtuoso Legal we have been commended by the UK Intellectual Property Office (UKIPO) as offering a “Gold Standard” IP audit service.  

This is a broad outline of the process we undertake with our clients. 

1. Preparation stage: An initial discussion to define scope (full audit vs. specific assets/portfolio), as well as a structured consultation to ascertain the status of the business, its goals, and priorities for the near and medium term. 
2. Data collection stage: The identification and creation of an inventory all IP assets that pertain to the business’s existing and planned operations. 
3. Analysis stage: Once the inventory has been completed, our team will conduct an in-depth analysis of all relevant IP and related contracts, reviewing (but not limited to): 
   • Legal status: e.g. are registrations in place/renewed? 
   • Commercial potential: e.g. can a patent be licensed? 
   • Risks: e.g. are competitors encroaching on trade marks? 
4. Reporting stage: Once the analysis is complete, we create an in-depth report which contains an exhaustive list of considerations for the business. These prioritize actionable steps (e.g. file a trade mark application for the EU, update employee IP clauses) that the business could or should take to register, commercialise and protect their intellectual property in line with the current and future plans. 
5. Strategy, and recommended implementation stage: Finally, we have a discussion with the business surrounding the report to help them develop a roadmap to integrate findings into business strategy, in a commercially impactful and proportionate way. 

 

What do you get from an IP audit? 

The key output from an IP audit is a report, described above, that highlights the business’s key priorities as it relates to their IP. 

In the holistic sense, when we complete an IP audit for you, what you receive is: 

1. The initial consultation helps you clarify your business’s operations, its near- and medium-term goals and the role of your intellectual property in it. 
2. The report which provides:
3. An overview of the business operation. 
   • An overview of the existing IP (registered and unregistered) in the business, as well as relevant contracts and legal agreements. 
   • An itemised list of priority actions for your business to consider (using a traffic-light system to categorise urgent, semi-urgent, and non-urgent actions) 
   • An executive summary and broader recommendation from our team as it relates to the list which factors in your commercial position and future plans. 
4. A final consultation to discuss the findings of the audit, as well as the offer of additional support in addressing the list of priorities. 

Following the completion of the audit, we are happy to offer you support in addressing the priorities that it brings to light.  

You are also welcome to consider our recommendations and take time to plan your next steps. 

 

How often should you audit your IP? 

The frequency of IP audits is broadly dependent on how fast-paced the business in question is in the generation and commercialisation of its IP. 

Many businesses benefit from ad-hoc audits as and when required, whereas more IP-rich businesses may look to integrate regular IP audits into their operations. 

Some key instances to consider include: 

• Initial audit: If you have not undertaken an IP audit for your business yet, the initial audit is the key starting point.  

• Annual reviews: Critical for fast-moving sectors, like tech or fashion. 

• Trigger events: 

• • Funding rounds or exit planning. 

• • Launching new products/services. 

• • Entering new markets (e.g. post-Brexit EU expansion). 

• Regulatory changes: Stay updated on changes in the law, UK IPO guidelines and other developments. 

Ultimately, undertaking an IP audit is a commercial exercise for a business, uncovering value, opportunities and potential risks. 

The value of an audit at any given time balances: early awareness with the quantity and impact of priorities that it will uncover.  

Each business will need to identify its own “sweet spot” that’s proportionate to its operations and the importance of IP in the same. 

 

UK government support for IP audits

Whilst some investment is required from businesses to instruct IP solicitors to complete an IP audit, there is a lot of support from the UK Government that can help businesses afford to take this important step. 

The government has put this support in place because it recognises the untapped value of intangible assets in many UK businesses and wants to help UK businesses benefit from their often-overlooked IP. 

As part of this, in 2024, the UKIPO launched the IP Advance programme, the latest version of a scheme that started several years ago. This initiative supports SMEs with fewer than 250 employees with their IP. In England, through the IPO’s partner, Innovate UK Business Growth, businesses within scope can gain access to tiered funding for IP audits as well as support and advice. 

• The first tier of funding support: the IP Audit grant offers SMES £2,250 (inc. VAT) toward their IP audit. The business in question is required to contribute £750 (inc. VAT) to the audit. 

• The second tier of funding support: the IP Access grant, provides a further £2,250 to help the company act on the findings of the audit (e.g. registering trade marks, or having contracts drafted up). Notably, this funding only offsets professional fees paid to the solicitor (i.e. not disbursements paid to the IPO), and businesses must fund 50% of the overall fees paid to the solicitor.  

In totality and aligned with the IP audit itself, this helps SMEs gain access to significant support as it relates to not only the audit itself, but also addressing the priorities that it uncovers. 

At Virtuoso Legal, when we conduct IP audits, we often guide businesses in the process of applying for grants relevant to their audit and put them in touch with the support the government has made available. 

 

FAQs about IP audits 

• How much does it cost? £2,000–£10,000+ (this varies by scope)—which is far less than the cost of litigation or lost revenue in proportion to the same scope if risks are not uncovered. 

• How long does it take to complete? 2–6 weeks for SMEs. For larger businesses, this can vary depending on the scope or specificity of the audit. 

 

Case studies: Real-world impact 

Let’s look at a couple of fictional examples of businesses, before, during and after they have completed an IP audit. 

Case Study 1: AISol Ltd (AI Startup) 

Before: 

• Developed an algorithm for logistics optimization. 

• Focused on product development, with no IP strategy. 

• Overlooked licensing potential and hadn’t filed trade marks. 

During the Audit: 

• Identified the algorithm’s applicability to healthcare logistics and explored the possibility of filing related patent applications. 

• Recommended precautions to ensure that the algorithm had the maximum possible protection as secret know-how. 

• Discovered a freelancer’s contract lacked IP assignment clauses. 

After: 

• Licensed the know-how to a healthcare SaaS firm, generating £150k/year. 

• Updated contracts to secure future IP ownership. 

• Filed trade marks ahead of a £2m seed round, impressing investors. 

 

Case Study 2: COMFYCOMFY Ltd. (Family-Owned Furniture Brand) 

Before: 

• Used a logo since the 1980s but never registered a trade mark for it. 

• Planned to expand into the EU post-Brexit. 

During the Audit: 

• Found a competitor had registered a similar logo in Germany. 

• Uncovered unregistered designs in their product catalogue. 

After: 

• Negotiated a coexistence agreement with the German firm, avoiding rebranding costs (£50k+ saved). 

• Registered key designs in the UK and EU, strengthening their market position. 

 

Wrapping up 

 

An IP audit isn’t a luxury—it’s a proactive step to safeguard your business’s future. Whether you’re preparing for growth, mitigating risks, or unlocking hidden value, understanding your IP portfolio is essential. 

Some additional Resources 

• UK IPO IP Health Check Tool 

• Innovate UK Funding Guide 

• Take our “Do I need an IP audit?” questionnaire below

 

 

Get in touch with our team

Want to find out whether an IP audit is right for you and your business? Get in touch with our team below to arrange a discovery call.

 

Get in touch

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Leeds 0113 237 9900

London 0208 088 2367