Analyzing and evaluating a company's intellectual property rights (IP rights) in the context of restructuring, M&A, and corporate acquisitions, is a crucial endeavor. To conduct proper transactions, it is necessary to take a closer look at the intellectual property of the transferring company. Lawyers who are experienced in German intellectual property law should make a specific analysis and evaluation of the IP assets before the planned transaction, commonly referred to as IP due diligence.
To conduct an adequate intellectual property due diligence examination in Germany, you need to provide the following information/documents:
1. List of all
- Patents (including software)
- Utility Models
- Trademarks and Service Marks
- Copyrights (including software)
the transferring company uses or owns. Further, you need to conduct a list of all applications made for registration of the above-mentioned intellectual property rights (with registration/application numbers and information regarding the protection period and geographic scope of the respective IP protection).
2. Know-How | Documents to assess the know-how of the transferring company: In what manner has this knowledge been kept secret until now? To whom has the know-how been revealed so far?
3. Licensing agreements pertaining to intellectual property, software or know-how (e.g. to manufacturing processes), regardless of whether the transferring company is the licensor or the licensee in these licensing agreements
4. Other relevant documentation about the intellectual property rights as mentioned under sec. 1
5. Information about opposition and cancellation proceedings (if any) against the intellectual property rights listed above under sec. 1
6. Description of pending or imminent proceedings (if any) against the transferring company with regard to the infringement of intellectual property rights or copyrights.
Analyzing and Evaluating the intellectual property rights of the transferring company is often intensive - but will eventually pay off. The better documented the IP is, the more value it usually provides. For more details, please contact us for an individual consultation.
There is no standard approach for an IP due diligence. Whereas an IP due diligence in big M&A transactions typically requires an in-depth analysis of the target's legal situation, medium-sized M&A deals oftentimes require a quick and immediate IP due diligence approach, identifying the most important risks. Such a due diligence is called a red flag legal due diligence.
Mostly, a red flag due diligence makes sense at the beginning of a transaction. During that time, it is still uncertain whether the interested buyer will indeed buy the target or whether he decides to stop negotiating with the vendor. Such a red flag IP due diligence usually identifies the most risky issues. Such "dealbreakers" can have a strong impact on the purchase price.
Contrary, a full scope IP due diligence goes much deeper into details. It intends to identify and to comment on all relevant IP risks. Typically, a full scope intellectual property due diligence ends in a comprehensive full scope IP due diligence report, whereas the results of a red flag IP due diligence are written in a more concisely manner.
Both types of IP due diligence reports should not only identify risks but also propose practicable solutions on how to minimize the risks for the buyer.
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