Your software company has been approached by a start-up company that has developed a mobile application that could provide your company, indeed your entire industry, with an exciting new platform to deliver products and services to customers globally. As a CEO, your first instinct is to lock up the start-up’s technology quickly because you don’t want any of your competitors to undercut you and take advantage of this great technological development. How can your company proceed quickly with the transaction, but at the same time protect itself from the potential legal liabilities that may be looming in the deal because of the intellectual property (“IP”) assets that are central to the transaction’s success?
Due diligence comes up, or should come up, in many types of IP transactions, including licensing deals, joint development agreements, mergers & acquisitions, and venture capital investments. Anytime the value of the transaction depends, in whole or part, on the issuer’s or target’s IP you must conduct some amount of IP due diligence to determine exactly what IP you’re acquiring before you acquire it.
In doing so, it’s important to be aware of and closely examine the types of IP issues that often plague these transactions. Software companies may have copyright, patent and trade secret problems with their technology and technologists. Biotechnology companies may have patent or trade secret problems with the same. Any technology company worth its salt will have some IP problems associated with its technological assets.
Before undertaking the task of conducting IP due diligence it’s critical to develop a good checklist to define the scope of due diligence you will undertake for the particular transaction you are considering. To do so, it is important to work closely with your company’s attorney to develop a checklist for the specific transaction, and identify early the IP issues that are critical to determine if the deal can proceed or crater. Keep in mind that even the most thorough IP due diligence will not provide you with absolute assurance that all possible IP issues will be resolved or found not to exist. Instead, focus early on the material issues most important to your transaction; those that if found to exist will scuttle the deal.
In the coming weeks, we will explore a series of IP due diligence issues your company should consider when faced with an opportunity to grow your business by acquiring IP assets from another enterprise.
Finkel Law Group, with offices in San Francisco and Walnut Creek, has assisted many technology company’s and investors conduct due diligence on the intellectual property assets of a target company in an acquisition or strategic investment transaction. When you need intelligent, insightful, conscientious and cost-effective legal counsel to assist you with an intellectual property transaction or investment you may be contemplating, please contact us at (415) 252-9600, or info@finkellawgrou