PowerPatent Enhances M&A Decision Making With IP Due Diligence Insights
Having insight into your company’s patent portfolio is important when making decisions about its growth and future. PowerPatent has developed a suite of products that can help you do just that.
Patent due diligence insights
Whether you are entering into a merger or acquisition, or you are considering selling a portion of your IP portfolio, the information you acquire through an IP due diligence investigation will benefit you in many ways. In this post, you will learn eight vital factors to consider when conducting your own assessment.
An IP due diligence investigation is conducted to determine the value of a target company’s patent portfolio. The process is designed to protect the investor from infringement and damages exposure, and to help the investor determine whether it is possible to monetize the patents.
An IP due diligence investigation should begin with a thorough review of the target company’s patent portfolio. This investigation can take several forms, such as a survey of all of the patents, a review of specifications, or a review of the file histories of patents. Depending on the scope of the transaction, the investigation may also include a review of claims, the underlying technology, and third-party rights.
The next step is to review the timeline of patent applications filed by the target company. This can reveal important historical information about the research cycle of the technology. It can also provide insight into the future direction of the business. The timeline of patent applications can also be used to identify technical reserves of the target company.
The final stage is to synthesize the findings of the IP due diligence investigation. This can be accomplished by identifying action items that are problematic and determining what needs to be done to resolve them. The priority of these action items should be based on the business and IP objectives of the transaction. It is common for the boundaries of the investigation to be adjusted to reflect these priorities.
A three-stage approach to IP due diligence can be an effective method for bringing tangible value to a transaction. The first stage of the approach involves educating corporate counsel and managers about the importance of IP and its implications. The second stage focuses on educating in-house counsel about the issues that need to be addressed, and the third stage is focused on integrating the results of the investigation.
The key tenets of a typical due diligence investigation include: (a) determining ownership of the IP; (b) establishing encumbrances on the patents; (c) evaluating the validity of the patents; and (d) assessing the potential for infringing the patents. During a fact-based investigation, the earliest questions that need to be answered are usually the most time-consuming. These questions function as filters that identify potential issues that need to be addressed.
The third stage of the IP due diligence investigation focuses on identifying potential opportunities to improve the IP portfolio after the transaction has been completed. This can include reviving or repurposing patent applications, or tailoring a licensing strategy for the new business.
Patent portfolio management
Whether you are conducting IP due diligence as part of an M&A or strategic investment, the process can be divided into manageable inquiries to get the most value out of your transaction. Identifying the key patents in your target portfolio, along with their quality, will help you realize M&A objectives. A professional patent portfolio management service can also assist you throughout the process.
Before implementing any strategic plan for the due diligence of your IP portfolio, you should take the time to understand your business objectives. These goals often sit on the other side of the table. When you are able to align your business and patent strategies, the outcome can be significant.
The first stage of a typical due diligence investigation involves collecting, evaluating, and analyzing the relevant factors for consideration. These factors include the scope of the IP, its strength and weaknesses, and how it fits into your overall business strategy. However, the fact-based investigation is typically the most time-consuming part of the process.
The next step is to establish which patents belong to the target company and which belong to third-party holders. This will help determine the enforceability of the patents in the portfolio, which is one of the major purposes of an IP due diligence. During the investigation, you should also identify potential sources of liability and risks. These factors can then be used to make a more informed decision.
As you continue to analyze the target’s patent portfolio, you should also identify the strengths and weaknesses of each of the patents. This will help you assess whether the portfolio is strong enough to support your business goals. If not, you may want to consider reshaping the deal.
The value of your IP can be the main selling point for your company. Using a professionally managed portfolio will ensure that your patent strategy and product strategy are in sync. This will help you reap the most monetary and non-monetary benefits from the technology you have invested in.
The process of creating a commercially-valuable patent portfolio can be very complex. However, it can be done if you have the right team to help you. Choosing the right team is important to ensure that you will receive the highest returns from your investment. If you do not have the expertise to handle the technical aspects of your patent portfolio, a specialized service can guide you through the process.
The cyclic diagram above illustrates the most common tenets of a due diligence investigation. The key is to prioritize the most critical elements of the review to ensure the most important parts of the process are complete in a timely manner. This approach is particularly effective when time is a factor.
The last stage of an IP due diligence process is to synthesize and prioritize the results. This is often the most important part of the process, and it helps to ensure that the most valuable information is disclosed in a timely manner.