Patent Due Diligence by U.S. Patent Attorney

For a variety of transactions, such as mergers & acquisitions, joint ventures, private equity investments, licensing negotiations, spin-offs, and the like, IP due diligence of a company's intellectual property portfolio can play a critical role in the value of the deal. Focusing on patent-related aspects of a transaction, PriorArtSearch.com performs patent due diligence for parties contemplating investments in technology companies. We provide a Patent Portfolio Analysis of the target company to mitigate the risk to the investing firm.

Although every IP due diligence inquiry is unique, it should achieve at least four objectives:

(1) assure the entity that it is receiving value for its investment;

(2) identify impediments to developing the intended business;

(3) provide the means to renegotiate terms of the transaction if there exists less value than was initially perceived; and

(4) familiarize the acquiring company with the assets it is acquiring.

Patent claim scope can vary widely. At one end of the spectrum are narrow patents that are easy to "design around." At the other extreme there are patents that provide a significant barrier to entry by a competitor. Where a patents lies on this spectrum can only be revealed by investigating its prosecution history, studying other patents, surveying the competitive patent landscape, and considering potential alternatives to the patented invention. As a result, patents require the most intensive due diligence scrutiny of all intellectual property.

Patent due diligence starts with a review of each patent and its prosecution history. Preliminary issues that are investigated during patent due diligence include ownership, inventorship, inequitable conduct, and maintenance fee payments (annuities).

Two of the most important components of a patent due diligence investigation are infringement and validity studies, which can often dramatically alter the incentives for completing the deal. The suitor wants freedom to operate (FTO) with the acquired technology and needs to ensure that the acquired patent portfolio is valid and enforceable to prevent third parties from practicing the acquired technology.

Finally, the strength and breadth of the claims must be considered. In other words, how easy would it be to design around this patent?

When hundreds of patents are involved, it is self-evident that there is an enormous amount of work to be done -- often in a very short time frame -- in a patent due diligence investigation. At PriorArtSearch.com, we are experienced in patent due diligence investigations and are prepared to help.