IP Due Diligence in M&A Transactions

Intellectual property due diligence by a buyer is important to obtain information about the nature and quality of a targets assets. A general identification of the targets IP is critical patents, trademarks, copyrights, trade name filings, internet domain names, software and databases and trade secrets. If the IP is material to the targets business then a buyer may identify particular areas of importance for the IP due diligence review. Determining ownership of the IP is also important is the IP jointly owned? Are there gaps in the chain of title that need to be corrected? Is the IP subject to a lien or security interest? IP due diligence needs to be conducted simultaneously with other due diligence and well in advance of closing to allow the buyer to assess the risks of the transaction as a whole, and seek protection through additional indemnification or purchase price adjustments, if necessary. —Nicole J. Harrell