Due Diligence

The quality and quantity of intellectual property assets can drive the value of a corporate transaction such as a merger or acquisition. IP due diligence involves a thorough investigation and analysis of IP assets relevant to the transaction. Ideally, this investigation is performed by qualified IP counsel during the early stages of negotiation. In many cases, however, transaction terms are set based on a somewhat non-analytical perception of intellectual property value, and IP counsel is brought in during the closing stages of a transaction to evaluate relevant assets and confirm there are no insurmountable IP problems.

Regardless of the timing, Kolisch Hartwell has the skill and experience to assist with IP due diligence.

We conduct full IP due diligence investigations, working closely with clients on both the target and purchasing side of corporate transactions to evaluate the patents, trademarks, copyrights and trade secrets to be transferred. Our attorneys bring broad legal and technical experience to each due diligence process, providing timely responses and expert IP counsel to ensure our clients’ ability to make informed merger and acquisition decisions.

Our Due Diligence services include:

Transaction analysis As a first step in the due diligence process, we examine the nature and purpose of the transaction and the industry, to determine the importance of the IP to the transaction. We will consider whether intellectual property is of primary or secondary concern to the parties, the extent to which it is licensed or litigated by the parties and by others in the industry, and the anticipated use of the IP by the acquiring party. Answering these questions helps to determine the appropriate extent of our subsequent investigation and analysis, and allows us to plan the remainder of the due diligence process.
IP asset investigation Our attorneys are highly experienced in evaluating the breadth, validity and enforceability of a target company’s IP assets. This typically includes, at minimum, evaluating IP ownership and ensuring that all maintenance fees and annuities have been paid, that other ongoing requirements have been met, and that there are no existing third party challenges to the IP rights. Depending on the results of the initial analysis, in many cases we also evaluate more substantive aspects of the target IP. For patents, this can include analyzing overall portfolio coverage, as well as the claim breadth, validity and enforceability of key patents. For trademarks, we can investigate factors such as the breadth of existing registrations, the extent of any concurrent use, and the extent of coverage in current or anticipated international markets. Similarly, we can investigate the ownership, scope and validity of any copyright and trade secret assets to be conveyed in the transaction. We can also review third party agreements, employment agreements, confidentiality agreements, and target company policies and procedures, to determine any impact on IP value.
Analysis and recommendations After analyzing the transaction and investigating the relevant IP assets, we are prepared to weigh the client’s goals in the transaction against the qualities of the intellectual property and provide a summary and recommendation. This typically includes a detailed description of the extent of the target IP, its importance within the relevant industry, any problems and corrective actions that can or should be taken, and whether our findings are consistent with the perceived value of the IP. As a result, the client should have a much clearer picture of the IP it will be buying or selling, and be better prepared to make an informed decision about the transaction.

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