By the time a term sheet is on the table, it is usually too late to fix a gap in a company’s IP ownership without cost, delay, or leverage lost to the investor. An IP portfolio audit done before a fundraise, and repeated before any major transaction, is one of the highest-return pieces of legal housekeeping a founder can do. This article sets out what such an audit actually covers, building on the specific gaps our other guides address individually.
Start with what actually exists
The first step of any IP portfolio audit is a simple inventory: every registered trademark, patent, industrial design, and plant variety right, wherever it is filed, whether at KIPI, ARIPO, or abroad; every domain name; every copyright-protected asset worth listing separately, such as core software, branded content, or proprietary documentation; and every trade secret the business genuinely relies on, such as a pricing algorithm, a customer list, or a manufacturing process. Many founders discover during this step that assets they assumed were registered were never filed, or were filed in a founder’s personal name rather than the company’s, an issue that surfaces disproportionately often in businesses that started as side projects before incorporation. The inventory should also capture pending applications, not just granted rights, since an application filed but not yet examined is still an asset worth listing, and its examination status is itself information an investor will want.
Chain of title: the step investors actually scrutinise
Owning a registered right is not the same as being able to prove clean ownership of it. For each asset, an IP portfolio audit should trace: who created it (an employee, a contractor, a co-founder, an agency); under what agreement, if any; and whether that agreement actually assigned the relevant rights to the company. Our guide to employee and contractor IP assignment covers the default statutory rules and where they fall short, but an audit needs to check the actual paper trail, not just assume the defaults applied correctly. Unrecorded assignments are a particular risk for patents, industrial designs, and trademarks, since Kenyan law generally treats an unrecorded assignment as inadmissible as evidence of title, meaning a technically valid but unrecorded transfer may not protect the company against a later, recorded competing claim.
The registers versus the reality
A plain registration certificate or extract from KIPI does not show everything an investor’s diligence team will want to know. It typically will not reveal pending opposition or revocation proceedings, whether renewal fees are current, or whether a mark’s registered specification of goods and services still matches what the business actually sells. The audit should independently check registry status for each asset close to the fundraise date, rather than relying on records from when the right was first obtained, since registrations can lapse, be opposed, or be narrowed by an amendment made after the original filing. These checks take time to come back and are inexpensive relative to what a late-discovered lapse can cost in negotiating leverage, which is a further reason to run them well before diligence formally opens rather than in response to an investor’s request list.
Trade secrets and confidentiality: the assets with no register at all
Kenya has no dedicated trade secrets register, so a portfolio audit’s job here is different: confirming that genuinely valuable confidential information is actually protected by enforceable agreements, not merely treated as secret by habit. This means checking that employment contracts, contractor agreements, and any third-party disclosures were covered by confidentiality obligations that meet the drafting standard set out in our guide to confidentiality agreements, including clear definitions, appropriate exclusions, and reasonable duration. A business that has been informally protective of a valuable process but never documented that protection contractually is in a materially weaker position than one that has, even if neither has ever suffered a breach.
Building the register investors will actually see
The output of an IP portfolio audit should be a single, current IP asset register: each asset, its registration number and jurisdiction, its status, its owner of record, renewal dates, and a note on chain of title. This is precisely the kind of document our guide to IP asset registers on Kenyan cap tables describes investors actually diligencing, and having it ready before it is requested changes the dynamic of a diligence process from reactive scrambling to a straightforward confirmatory review.
Who should run the audit
A founder or in-house team can complete the inventory stage of an IP portfolio audit on their own, since it is mostly a matter of gathering documents and records the business already holds. The chain of title review and registry verification stages benefit from external legal input, since they involve reading agreements for what they actually assign rather than what they were probably intended to assign, and checking registry status through the relevant channels at KIPI or ARIPO. Running the audit with outside counsel involved from the start, rather than bringing counsel in only once an investor’s diligence request lands, also means any gaps identified can be fixed with ordinary drafting and filing work instead of under transaction deadline pressure.
How We Can Help
Clay & Associates Advocates runs IP portfolio audits ahead of fundraising, acquisition, and licensing transactions, and fixes the gaps they find. Our trademark registration guide and patent registration guide cover the underlying registration processes. Contact our Intellectual Property practice to schedule a pre-investment IP audit.
Sources: Industrial Property Act, Cap. 509; Trade Marks Act, Cap. 506.
Frequently asked questions
How far in advance of a fundraise should an IP portfolio audit happen?
Ideally several months before active fundraising begins, since fixing gaps such as unrecorded assignments, missed renewals, or unfiled marks takes time, and investors’ diligence requests typically arrive with tight deadlines once a term sheet is signed.
What is the single most common issue an IP portfolio audit finds in early-stage Kenyan companies?
Assets registered in a founder’s personal name, or created by a contractor without a written assignment, rather than clearly owned by the company itself. This is exactly the gap our guide to employee and contractor IP assignment addresses.
Does a registration certificate prove clean ownership?
Not by itself. It shows the right exists but not whether the chain of title behind it is properly documented, whether renewal fees are current, or whether there is a pending opposition or revocation proceeding, all of which require an independent registry check closer to the transaction date.
How are trade secrets audited if there’s no register for them?
By reviewing the underlying confidentiality agreements and access controls rather than a registry entry, since Kenyan trade secret protection depends on genuinely confidential treatment and enforceable contractual obligations, not registration.
