The intellectual property audit is a critical part of the due diligence conducted on any technology business under consideration for sale or purchase. The objective of the audit is to trace development and title for purposes of validating ownership. This ownership of the technology asset is a prerequisite to transfer of title to the buyer of the business.

The first step in the audit is to identify and define the technology asset. Tangible representations may include computer code, formulas, methodology statements, equipment or hardware configurations and engineering processes.

Validating the development process is an important part of the audit. This definition involves documenting the stages of development and participants. Customer application and market placement is also important. Your due diligence process will involve review of all contract references to the technology.

Establishing the chain of title also includes tracing the involvement of 3rd party contractors, consultants and technologies. Understanding the risk of 3rd party infringement claims is a prerequisite to drafting the appropriate terms of conveyance and indemnification.