Intellectual property due diligence: independent review

In an acquisition, a fundraising or a restructuring, intellectual property is often dealt with in an annex, as a list of titles and contracts. Yet the questions that cause a deal to fail are simple: does the company really own its patents, software and trade marks? Have the employee inventions been properly remunerated and assigned? Do the licences granted limit freedom to operate? Does a dispute threaten the main product? The review answers these questions in a format suited to the timetable of a transaction.

We also assist innovative companies wishing to present their business to Bpifrance or to prepare a fundraising. The diagnostic covers the intellectual property side of the file: the assets held, their protection, the contracts that allow them to be exploited and the risks that may weigh on the financing.

The engagement includes a review of patents, software and know-how, verification of ownership and key licences, and an action plan to address identified issues. A summary sets out the strengths and limitations of the portfolio for lenders or investors and helps prepare the supporting documents for the data room.

The scope is tailored to the project and coordinated, where appropriate, with the company’s patent attorney and financial advisers. The terms on which the report may be shared with third parties are agreed at the outset of the engagement.

• The status and ownership of the key assets: patents, applications, trade marks, designs, software, domain names, identified trade secrets.
• A targeted review of protection, scope, encumbrances, licences, research agreements and the position of employee inventors.
• Red flags ranked by their impact on the transaction.
• Questions to ask in the data room and suggested clauses or remedies: warranties, conditions precedent, price adjustments, regularisations before signing.
• A standalone report or a white-label appendix that can be integrated into the corporate counsel’s report.
• An optional hundred-day support after completion of the transaction.

First, the scope, the reservations and the message for the deal team are agreed with lead counsel. Next, the review is carried out from the data room, supplemented by the public registers of the INPI, the European Patent Office and the EUIPO, and by checking pending disputes. Finally, the report is delivered in the format and under the brand decided by lead counsel. The firm undertakes not to solicit the end client and to offer subsequent support only with the referring firm’s agreement. This non-solicitation rule is written into the engagement letter.

Business law firms without a patent department, firms organised in independent networks, venture capital and private equity funds, family offices, investment banks, business development departments of industrial groups examining a technology target.