Intellectual property helps businesses reach their objectives by providing strength and protection around key products and brands. In corporate transactions—like mergers and acquisitions, financing, joint ventures, partnerships, or capital investment—one aspect of proper due diligence includes understanding a company’s intellectual property as well as its intellectual property practices. The framework for analysis may vary depending upon the type of transaction contemplated and the position of the party in that transaction. But, certain topics are almost always important to examine, including:
- What, if any, intellectual property (e.g., patents, trademarks, trade dress, copyrights, trade secrets) does the business own?
- What does the intellectual property cover?
- How important is the intellectual property to business objectives?
- How strong is the intellectual property? Is it susceptible to challenge? Are potential competitors likely to get around protections to compete in the same space?
- Have contractual assignments of intellectual property been made to the business?
- What is the status of the intellectual property? Has it been applied for? If so, where is it at in the application or examination proceedings? If it hasn’t been applied for, should it be? Have rights already been issued? If rights have been issued, are maintenance fee payments up to date? Has any intellectual property expired?
- Are there any licenses, liens, security interests, or other conditions that could potentially affect the value, transfer, or use of the intellectual property?
- Has the business undertaken risk-mitigation measures, like prior art searches, freedom to operate opinions, etc., that could help protect it against infringement liability (which is usually not covered by business insurance)?
- Has the business ever issued or received cease-and-desist letters, or been involved in any disputes relating to intellectual property?
A registered patent and/or trademark attorney can help businesses ask or answer these questions within the context of corporate transactions, providing an additional layer of due diligence protection.