LEGAL & TECHNICAL DUE DILIGENCE

What is Due Diligence?

A thorough and comprehensive Intellectual Property (IP) due diligence requires much more than compiling a listing of the company’s IP assets. Rather, an IP thorough due diligence ecompasses an assessment of the legal, technical and financial strength of the company”s IP rights in the marketplace, the strength of the competitors’ IP rights in the marketplace, and the effect of the IP on the company’s products and other IPRs.

What does a Due Diligence Team do?

There are some general considerations to be made for all forms of IP. For instance, all of the target company’s current IP should be identified and cataloged, including current patent and trademark applications and other IP rights. This process should identify the dates of application, issuance, expiration, required maintenance payments, and whether foreign IP protection has been obtained. Additionally, the true ownership of each piece of IP should be identified. This is particularly true for IP that has been licensed or assigned to the target company. Ownership verification requires analyzing assignments and licensing agreements, as well as cross-referencing the Patent & Trademark Office files.

There are several aspects of IP due diligence that are unique to situations wherein the target company possesses a patent and trademark or copyright portfolio. A complete investigation into a company’s IP portfolio can be expensive, yet the cost is typically small when compared to the cost of litigating an IP infringement claim. Carefully identifying the goals of the IP due diligence investigation will often eliminate the need to completely analyze all company’s IPRs.

What skills are required?

Often, the business realities are such that in order for the transaction to take placce expeditiously, the due diligence must be done quickly and normally in a rather short time. The IP due diligence team needs to be experienced and focused, otherwise critical issues will be missed which affect the transaction to take place. Prioritization of key areas of inquiry based on business objectives of the deal is essential to success.