IP Due Diligence
IP Due Diligence
Intellectual Property (IP) due diligence is a process of evaluating the IP assets of a company or organization prior to a merger, acquisition, investment, or other business transaction. It involves reviewing and assessing the company’s patents, trademarks, copyrights, trade secrets, and other IP assets to determine their value, potential liabilities, and enforceability. The goal of IP due diligence is to minimize the risk associated with IP ownership and use, and to ensure that the IP assets being acquired or invested in are properly protected and can be used as intended.
IP due diligence mainly provides insights into:
- Status and Validity of the IP
- Strength of the IP
- Potential threats & risks to the IP (Circumvention,
Infringement and invalidation) - Enforceability of the IP
- Market relevance of IP
IP Due Diligence becomes an essential activity in the
events of:
- Mergers and Acquisitions
- any investor willing to invest in a startup or a
company. - If an enterprise is willing to monetize the intangible
assets for fundraising - When an organization wants to commercialize
intangible assets by way of technology transfer.
A periodic or event-based IP due diligence helps an organization to plan and strategize its IP protection to make it a more comprehensive offering and also increases the value of the intangible assets and eventually boosting the balance sheet of the company while parallelly mitigating the risks of devaluing or overvaluing the IP assets.
The steps involved in IP due diligence typically include the following:
- Identification of IP assets: A comprehensive inventory of all IP assets, such as patents, trademarks, Industrial Designs, copyrights, and trade secrets, is compiled.
- IP ownership and chain of title review: The ownership of each IP asset is verified, and any encumbrances, licenses, or other third-party rights are identified.
- IP infringement and validity analysis: A search is conducted to determine if any of the IP assets may infringe upon the rights of others or are invalid for any other reason.
- IP licensing review: All IP licensing agreements are reviewed to determine their scope, term, payments, milestones and any minimum annual royalty clauses and other important details.
- IP Assignment Status: All IP assignment agreements, assignments from inventors to applicants are reviewed and checked for the payments, milestones and any minimum annual royalty clauses.
- IP enforcement and litigation review: Any past or current IP-related litigation, including infringement and invalidity actions, is reviewed.
- IP valuation: The value of the IP assets is estimated and assessed periodically to be reflected in the balance sheet as intangible assets.
- IP portfolio management: The company’s IP portfolio management practices are evaluated to determine if they are effective, market relevant and efficient.
- IP risk assessment: The overall IP risk associated with the IP assets is assessed, and recommendations are made for mitigating that risk.
These steps are typically performed by a team of IP professionals, including lawyers and IP specialists, who have the expertise and experience to conduct a thorough and comprehensive IP due diligence investigation.
IP AUDIT
An IP audit helps you discover hidden IP assets. Professional intellectual property auditors are the best choice for conducting a thorough audit, however, preliminary checks may usually be made internally. Performing an IP audit allows you to take stock of all the possible intellectual property you own.
An IP audit, also known as an intellectual property audit, is a systematic review of a company’s intellectual property assets. Intellectual property (IP) includes any creations of the mind, such as inventions, literary and artistic works, designs, symbols, names, and images, which a company can legally protect.
The purpose of an IP audit is to identify and evaluate a company’s IP assets, as well as any potential risks to those assets. This can include patents, trademarks, copyrights, trade secrets, and other proprietary information. The audit typically involves reviewing legal documentation, such as patent and trademark registrations, and interviewing key employees to identify any unregistered IP assets or potential infringement issues.
An IP audit can be useful for several reasons. First, it can help a company identify any gaps in its IP protection, such as unregistered trademarks or patents that may be vulnerable to infringement. Second, it can help a company identify potential sources of revenue, such as licensing or selling its IP assets. Finally, it can help a company prioritize its IP-related expenditures and develop a comprehensive IP strategy.
Overall, an IP audit can be an important tool for companies that rely on their intellectual property assets to generate revenue and maintain a competitive edge in the marketplace.
Through an IP audit you can make an inventory of your potential IP assets.
As an upshot of an IP audit, a corporation can craft a robust IP strategy that supports its overall business objectives. After an IP audit has been completed, the following actions can be taken by the company:
The audit’s findings will help the organisation establish priorities for its intellectual property (IP) in terms of commercial value, risk, and legal protection. The corporation can then focus its resources on the intellectual property it considers to be the most important and profitable.
If the audit turns up any red flags regarding potential dangers or liabilities, the business can take corrective measures. For instance, if the firm is violating another’s intellectual property rights, it may need to either stop using the infringing IP or get a licence to continue using it.
In order to better safeguard their intellectual property, businesses should conduct audits to determine where their current measures fall short and how they might improve. This could involve exploring new licencing or collaboration options, as well as filing for new patents or trademarks.
The audit can aid the company in evaluating licencing and monetization prospects for its IP holdings. The corporation can potentially expand its revenue streams by licencing its technology or trademark, for instance.
The audit can provide useful information for incorporating intellectual property into the company’s overall business plan. This can aid the firm in capitalising on its intellectual property to advance its business objectives.
An IP audit is a systematic examination of a company’s intellectual property that yields actionable insights for improving operations and expanding the company’s reach. Implementing the recommendations from the audit can help a firm improve its intellectual property portfolio, lessen its exposure to risk, and increase the return on investment from its IP holdings.
IP audits are performed majorly for:
- Reducing costs – A well-managed list of IP assets can help you identify obsolete assets. Decisions can then be taken to stop paying maintenance costs for obsolete assets, resulting in significant cost reductions.
- Licensing– An IP audit is vital to know which IP assets are core to your business and which are not. Licensing decisions can then be made accordingly. For example, you may decide to license a non-core IP asset in order to create an additional revenue stream.
- Mergers and acquisitions – IP assets will play an important role in a third party deciding whether to merge with or acquire your business.
- Anti-infringement actions – Knowing the value of your IP assets makes it easier to take decisions on whether it is cost-effective to take action against infringement and in what way this could be done.
From IP Audit to IP asset management journey becomes much easier. In IP Asset management the organisation can will benefit in :
(1) Formation of IP asset management team
(2) Creating an IP culture
(3) IP policy monitoring
Major Types of IP Audit
There are three major types of IP audit:
a) General-purpose
This is broadest type of IP audit, used by new companies or those considering implementing new IP policies, rules standards or procedures. It is also suitable for companies implementing new marketing approaches, directions, or major reorganizations.
b) Event-driven
This type of IP audit is also known as “IP due diligence”. It is used to assess the value and risk of a company’s IP assets. The event-driven audit is often utilized in the context of mergers/acquisitions and joint venture:
- before entering into a financial transaction involving IP, such as an initial public offering;
- when launching a new product or service;
- when considering IP licensing; and
- in cases of bankruptcy and layoffs.
c) Limited-purpose
This is the IP audit with the narrow scope. It is situational in nature and typically used to justify a legal position or the valuation of a particular IP asset. It can also be applied in the context of:
- personnel turnover;
- foreign IP filings;
- before engaging in e-commerce;
- changes in IP law and practice;
- “IP Sanitation TM” procedures (seeking to avoid the infringement of third-party copyright material); and
- preparing for litigation.
Most ignored Audit is that of 2 types:
- Trade secret audit: A trade secret audit involves reviewing the company’s trade secret policies and practices to ensure that they are being properly protected and that employees and partners are not violating them.
- Due diligence audit: A due diligence audit is conducted prior to an acquisition or merger to evaluate the IP assets of the target company and identify potential risks and liabilities.
An IP audit can help you find all the various forms of intellectual property in your organisation followed by an analysis of the costs and benefits of securing intellectual property rights for these holdings.
Patent Invalidity Search
A Patent Invalidity Search is a type of legal investigation aimed at determining the validity of one or more patents. It is conducted to assess the potential risk associated with using, licensing, or acquiring a patent and to determine if the patent may be successfully challenged in court.
The process of a Patent Invalidity Search typically involves:
- Review of the patent’s claims and specification: To understand the scope of the patented invention and its claims.
- Literature and database search: To find prior art references that may predate the invention described in the patent, and that may be used to challenge the patent’s validity.
- Analysis of prior art references: To determine if any of the prior art references found in the literature and database search anticipate or render obvious the claims of the patent.
- Assessment of validity: Based on the analysis of the prior art references, an opinion is given on the likelihood of the patent being held invalid in a court of law.
- Preparation of a written report: The results of the Patent Invalidity Search are documented in a written report that can be used for making informed business decisions.
It’s important to note that a Patent Invalidity Search is not a guarantee of a patent’s validity and does not guarantee that a court will reach the same conclusions as the search. The search is intended to provide information and insights to help inform business decisions and reduce the risk of costly litigation.
Office Action Responses
Getting a patent is not a straightforward process and there is a low likelihood that a patent will be granted immediately upon filing, even if the application and paperwork are top-notch. After the submission of a patent application, a patent examiner will review it for any previous work that may conflict with the invention and any defects in the filing. It is our responsibility to overcome these objections through effective justifications or by making adjustments to the patent claims in the Office Action Response.
A Patent Office Action Response is a written response submitted by a patent applicant or their representative in response to a rejection or objection raised by a patent examiner during the examination of a patent application.
The purpose of a Patent Office Action Response is to address the concerns raised by the patent examiner and to persuade the examiner to grant the patent. This response may include arguments and evidence to show why the invention is novel and non-obvious, and why the claims are supported by the specification.
In some cases, the Patent Office Action Response may also include amendments to the claims or the specification, or additional evidence to support the claims. The response must be carefully crafted to address the specific objections raised by the examiner and must be filed within a specified time frame, typically within six months from the date of the office action.
The outcome of a Patent Office Action Response can greatly impact the success of a patent application, so it is important to carefully consider all options and to work with a knowledgeable and experienced patent agent to draft the response.
The goal of responding to an office action is to overcome these objections by providing convincing justifications or making the necessary changes to the patent claims.
Our services include patent prosecution and registration, licensing and assignment, contract negotiation and drafting, due diligence, clearances and regulatory compliances, dispute resolution and enforcement
