When was the last time you audited your financial health, a top-to-bottom review of your portfolio, including stocks, bonds, and Certificates of Deposit? Like most investors, you probably have general,  though not specific, knowledge of your financial health. And, like most investors, you probably have not audited it.

Same goes for companies owning intellectual property. Mention the phrase “trademark audit” and the decision-makers balk. Reflexively. Of course, the reflex is inherently sourced in the cost factor reflected by the cost of time for an in-house counsel, the cost of money for an outside counsel.

But the cost of not auditing the company’s trademark portfolio can be frightening.

A trademark audit is simply a study of the company’s trademarks. It will uncover vulnerabilities, oversights, and gaps in the trademark portfolio. Because trademark law is based on use in commerce, regular meetings with the company’s marketing team will be necessary to understand how the company uses or plans to use the trademarks.

Additionally, a trademark audit will trigger a vital conversation regarding applying for trademark registrations at the United States Patent and Trademark Office. A company may use a common law trademark and be satisfied at that level. But the audit will reveal whether an application at the USPTO and eventual trademark registration on the Principal Register will be worth the cost.

If the company does not conduct a trademark audit, then the aforementioned vulnerabilities, oversights, and gaps will go unchecked. These problems can lead to a abandonment of a registered trademark or weakening of a common law trademark. Abandonment occurs if the trademark owner does not use the trademark in commerce for at least three years.

The trademark audit may also reveal the futility of certain trademark activities. In turn, the company may decide to take action regarding certain trademarks, including withdrawing applications, discontinuing use, or scaling down the goods and services concerning the trademarks in question.

A trademark audit is more than a gut check. Think of a trademark audit like an annual physical where the trademark attorney is the doctor and the trademark portfolio is the patient.

As the doctor shares the results of the physical with the patient, so should the trademark attorney share the results of the trademark audit with the company’s executive team. And as the doctor suggests a course of action for the patient, so should the trademark attorney.

The trademark audit’s value stems from analyzing the company’s trademark portfolio in an organized fashion culminating in a document outlining the status of every trademark along with the action taken by the company and rationale behind the action. Decisions about further action will be based on the results of the trademark audit rather than institutional memory.