The Problem with Patent Due Diligence in Mergers and Acquisitions and How to Fix It

The joining of 2 companies requires a good understanding of the IP positions of each

The joining of 2 companies requires a good understanding of the IP positions of each

As a business or investment professional involved in mergers and acquisitions (“M & A”), are you conducting patent due diligence according to the standard practices of your M & A attorneys and investment bankers? When patents form a significant aspect of the value of the transaction, you are probably getting incorrect advice about how to conduct due diligence. The due diligence process must take into consideration the competitive patent landscape. If competitive patents are not included in your vetting process, you may be significantly overvaluing the target company.

In my many years of intellectual property and patent experience (more info here: http://www.jackiehutter.com/), I have been involved in a number of M & A transactions where patents formed a significant portion of the underlying value of the deal. As the patent specialist on these transactions, I took direction from highly compensated M & A attorneys and investment bankers who were acknowledged by C-level management to be the “real experts” because they completed dozens of deals a year. To this end, we patent specialists were directed to check the following 4 boxes on the patent due diligence checklist:

  • Are the patents paid up in the Patent Office?
  • Does the seller really own the patents?
  • Do at least some of the patent claims cover the seller’s products?
  • Did the seller’s patent attorney make any stupid mistakes that would make the patents difficult to enforce in court?

When these boxes were marked “complete” on the due diligence checklist, the M & A attorneys and investment bankers had effectively “CYA’d” the patent issues and were free from liability relating to patents in the transaction.

4 thoughts on “The Problem with Patent Due Diligence in Mergers and Acquisitions and How to Fix It

  1. ATIG

    Jackie,

    I understand I make a mistake, Wouldn’t it be easier to correct me.
    I am in need to learn and to compare point of view
    Sorry if I don’t have the good informations.

    I must adapt for next change.

    Thank you,

    Sami vt@card4net.com

  2. ATIG

    Jackie,

    There is no one there to give me guidance?

    You can help me through the many minefields that this industry.

    Wouldn’t it be easier to increase the share of a business you know than to get a share of a business you don’t know?

    Thanks for your help.

    Sami

  3. ATIG

    Jackie,

    I’m surprised by how we ignore my comments !!!!

    Madame Jackie is not the first time.

    Can you imagine where one does not have to lose for another one to win?

    What powerful strategy because it’s so easy to deploy!!!!

    After all,We have to Differentiate Between Knowledge And Information.

    Thanks for your help,
    Sami

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