In classic M&A agreements, for example when acquiring a company, industrial property rights (patents, utility models, trade marks and/or designs) are regularly part of the subject matter of the agreement. The same applies to licence agreements.
IP due diligence is essentially a careful examination of the industrial property rights that are to become part of a planned contract. The scope of this review depends heavily on the specific subject matter of the contract, the parties wishing to conclude the contract and the framework conditions to be observed. If, for example, two companies are involved that manufacture and offer products in a highly complex field of technology, such as aviation technology, the examination should be much more intensive than for companies that are only interested in the distribution rights of trivial products.
If all the intellectual property rights to be examined are known (which may well be the first hurdle), their register status and actual substantive ownership of rights should at least be examined. It is not uncommon for transfers of rights to be incorrectly documented and/or not entered in the relevant register. Even at this point, the buyer may be threatened with avoidable legal disputes.
In addition, an IP due diligence review can be used to estimate the future costs (e.g. maintenance fees, costs for pending infringement and/or validity proceedings), the economic value of the individual property rights and whether the property rights portfolio of interest also covers the actual product range. In the case of pending grant or registration proceedings for property rights, the prospects of grant or registration should also always be assessed.
Finally, it is always advisable to carry out an IP due diligence check before signing an M&A contract or license agreement.
Do you have questions about IP due diligence checks or do you need an IP due diligence check? Please do not hesitate to contact us in hall 1 at stand 716!
