Are you in the process of acquiring a business? Or perhaps your company is interested in buying a product from a third-party seller. Either of these scenarios requires careful consideration of the seller’s intellectual property (IP).
This is where due diligence comes in. For IP acquisition, due diligence refers to reviewing the IP assets of the target business, which can include any trademarked, copyrighted, or patented piece of information, product, or tool. By examining these items, you can understand the strength and scope of the target IP and how it will affect your business.
IP due diligence can allow you to determine issues such as:
- The projected revenues and expenses related to the IP
- The current IP status such as whether a patent is up-to-date
- Any infringement claims against the target business’ IP
- Any products that are missing IP protection such as copyrights or patents
- Whether the owner of the IP has the right to sell or transfer ownership
Conducting an IP due diligence review provides you with clarity, assurance and understanding of the target company and all their assets.
It’s ideal to review IP assets early in the acquisition phase as the discovery of specific IP issues can cause a deal to fall through. For example, if the target IP is involved with multiple infringement claims that have yet to be resolved, it can cause added trouble for your business. Even when an IP issue is not serious or extensive, it can create annoyances and obstacles that influence terms, timing and price.
Any business acquisition has the potential to affect both parties involved significantly; IP acquisition is no different. As such, business owners would be wise to make IP due diligence a priority during the business transaction so you can feel confident when moving forward with your plans.
