Intellectual property and contract compliance

Every day, company bottom lines are impacted because vendors, distributors, and licensees fail to meet their full contract obligations. Likewise, a company might have inadvertently exceeded the licences they have use rights for, or under-utilised their investment in licences procured.

Whatever circumstances - complex or inadequate contracts, key responsibilities neglected, or contracts failing to reflect changed circumstances– third parties can strongly influence company costs and revenues.

KPMG in India can help strengthen and monitor your contractual compliance needs by providing key services such as:

• Royalty/Licence compliance

• Contract/Agreement compliance

• Reseller and distributor reviews

• Media reviews#

• Licence compliance advisory/Software asset management

• Open source software

• Intellectual Property advisory

Our clients can gain from our extensive experience spanning several domestic as well as cross border cases across multiple industries and geographies and our methodology which relies heavily on technology for providing meaningful insights.

Backed by our experience of having performed more than a thousand previous engagements, we estimate that as much as 70 per cent of all self-reporting by business partners or customers is inaccurate. While under-reporting of revenues can be deliberate, in many cases it results from miscommunication, misunderstanding or poor contract administration. This underpins our royalty, contract/agreement compliance, and reseller and distributor reviews offerings, which usually result in an ROI of 10:1 for our clients.

We analyse royalty contracts to understand reposting systems and processes, review underlying purchase/sales data including supporting management information or supporting data to identify any under reporting, Bribery Act and Indian Prevention of Corruption Act violations.

We analyse indirect and direct spend categories with an aim to identify direct bottom line benefits to organisations, or provide evidence of any weaknesses within the organisation’s processes and controls. We also analyse contracts with Joint Venture (JV) partners, outsourced process partners, cost plus arrangements, open book arrangements, Most-Favoured Customer (MFC) obligations, etc. to assess the appropriateness of and compliances to contractual arrangements as well as validation of cost allocations.

We analyse arrangements, with clearing and forwarding agents, channel partners, resellers, etc. to understand misuse of any discounts/rebates schemes, evidence of any grey market activity as well as non-compliance with any other contractual terms.

We analyse arrangements with advertising agencies to understand actual advert placements and billing mechanisms, the actual vs estimated costs, availing of all applicable rebates/discounts/pass through benefits as well as compliance to all other SLAs and contractual terms.

Our proactive service to our clients to assist them in Software Licence Compliance and Software Asset Management is called License Compliance Advisory. This service helps our clients to understand, detect and address issues related to compliance and resulting reputational risk (and/or associated financial/legal risks). It also helps in saving money on their investment in software through better utilisation by understanding and building appropriate Software Asset Management practices. Depending on the requirements, we have helped our clients with review of software licence contracts (especially Enterprise Licence Agreements), licence baseline position for several software publishers, cloud advisory, SAM tool advisory including configuration and implementation, SAM maturity assessments, SAM training, and an on-going managed services.

Open Source software licences have specific requirements which users should comply with. If an organisation fails to comply with the licence, the organisation runs the risk of exposing their proprietary software code to the open source community. We can help organisations create a risk management framework along with an appropriate policy, process, tools and educating users to identify and prevent associated risks.

We also help select, implement and set-up code scanning and conflict analysis processes for open source licence management, and assist in M&A due diligence to review possible IP infringements due to usage of Open Source software.

We aim to help clients build a robust intellectual property/asset ecosystem within their organisations which can help mitigate risks and build long-term value. To help clients achieve this objective, we have a dedicated cross-functional team with the relevant technical, management, legal, accounting and tax experience in IP.

We help our clients identify relevant IP assets within a process or a product and then formulate a strategy to help protect them and gain advantage from it. We also help our clients assess IP ownership and potential infringement in M&A/technology transfer cases.