Mergers and acquisitions can be time consuming and complicated, especially when there are intellectual property issues to contend with. Agreeing on the value of the assets can be difficult, and more than one M&A transaction has fallen by the wayside because the parties could not agree on IP value or resolve a dispute regarding current and future ownership of IP assets.
Because IP can be such a point of confusion and contention in the M&A process, consulting with a Washington, DC patent attorney from the outset is recommended. To save time and resources, it is a good idea to consider the following issues before your first appointment with the intellectual property lawyers.
Is the seller able to provide a complete list of all intellectual property assets?
The seller should be able to provide ownership information pertaining to all IP assets in its portfolio, including:
- All patents owned and patent applications
- All trademarks owned
- Any materials with registered copyrights
- Any trade secrets or other proprietary information
- All domain names owned, whether in use or not
Can the seller substantiate ownership of all intellectual property assets?
Do not assume that all IP held by a company is wholly owned by that company. Sometimes a seller – intentionally or not – might misrepresent the extent of IP ownership. Because this can have a huge impact on a company’s valuation, it is important to dig deeper into exactly who owns how much of all relevant intellectual property.
Questions to ask include:
- Does the seller have 100 percent ownership of each IP asset and, if not, what are the details of ownership? It is important to obtain copies of any contracts regarding IP ownership.
- Has any part of any of the IP assets been licensed to a third party? If so, what are the terms of the license? Be sure to obtain copies of all license agreements.
- Are there any contracts or agreements in force that could affect future IP ownership? Even if there are no license agreements in force currently, it is important to investigate whether there is any possibility that the company has made arrangements for future IP licensing or sale.
Is there pending litigation or other disputes regarding the ownership or use of the intellectual property at issue?
IP disputes cannot only impact the parties financially, they can cause delays or even end up destroying the transaction. Because IP disputes can affect the current and future value of a company’s assets, understanding potential exposure due to IP issues is an important element in M&A negotiations.
How a Washington DC Patent Attorney Can Help
Taking the time to gather the preliminary information discussed above before you make an appointment with a Washington DC patent attorney will save you time and money. IP due diligence is an important part of the mergers and acquisitions process, but that doesn’t mean it has to be long, laborious, or prohibitively expensive.
