Today, regardless of whether you intend to start a business in England or are already a multi-billion dollar company, intellectual property (IP) is often one of the most important assets of a company. While IP can determine the value of a corporate transaction in the UK, third party intellectual property rights can also have a significant impact on its value.
Therefore, it seems rather strange that the implementation of due diligence in the field of intellectual property is in many cases one of the last in the to do list in preparation for corporate transactions, and is often underestimated. In vain! This article will describe the role of integrated verification of intellectual property rights in corporate transactions. Perhaps we can convince you that such a procedure is vital.
What is IP due diligence?
This is primarily an assessment of all intellectual property owned, used and/or licensed by a company. In result of such verification, it becomes clear how the company protects its property, whether it is products, technologies or services. Well, of course, it allows you to evaluate the IP rights of third parties that can affect the business.
When does it become necessary to conduct a legal audit of IP? Most often, such a check is needed for M&A transactions, but also for:
- the company’s IPO;
- attraction of external investment capital;
- involvement in licensed technologies, etc.
The scope of the due diligence procedure for intellectual property in England and in other jurisdictions will vary depending on each of the circumstances.
IP in English law
How intellectual property is seen in the UK? It is considered as a general conceptual category, covering copyright and patent law, the legal regime of design and trademarks, as well as numerous related rights.
Legal regulation of intellectual property is characterized by specificity. The UK belongs to countries with the Anglo-Saxon legal system (common law countries), where a special role in the system of sources of law has a judicial precedent. In this regard, it is extremely important to determine the role of the law and the role of precedent in the IP regulation and protection. A precedent in English law is understood as ‘an example or case that is accepted or can be accepted as a model or rule for subsequent cases or by means of which any similar act or circumstance can be confirmed or explained’.
Freedom to operate
The due diligence process in the field of IP also involves an analysis of the company's freedom to operate (FTO), the main part of which is a close examination of possible potential violations of the rights of third parties. Therefore, we see it as an issue of prime importance to timely detect and evaluate all pending, ongoing or completed disputes and litigation with third parties and the potential risks of violation of the rights of third parties.
If you decide to sell the business abroad, most of the assets of which are related to intellectual property, then a very reasonable and appropriate decision will be to conduct a comprehensive IP check to correctly assess the entire value of the property being sold. If the transaction is planned in the UK, we suggest you order an individual consultation on due diligence procedures in England with specialists from IQ Decision UK.
Due diligence of IP rights will be extremely beneficial for a potential buyer/investor. Ultimately, you will be able to make more informed decisions in any transaction.
Learn more about how to conduct a comprehensive IP due diligence of a company by contacting us in a convenient way for you. Our team of law professionals will also assist in conducting due diligence of the company’s corporate property in England and other jurisdictions upon request.