IP due diligence is essentially a careful examination of the industrial property rights that are to become part of a planned contract. The scope of this examination is highly dependent on the specific subject matter of the contract, the contracting parties wishing to conclude the contract and the framework conditions to be observed. For example, if two companies are involved that manufacture and offer products in a highly complex field of technology, such as aeronautical engineering, the examination should be much more intensive than in the case of companies that are only interested in the distribution rights of trivial products.
If all the IP rights to be examined are known (which may already be the first hurdle), at least their register situation and the actual substantive ownership of the rights should be examined. It is not uncommon for transfers of rights not to have been correctly documented and/or not to have been entered in the relevant register. Already at this point avoidable legal disputes may arise for the buyer.
In addition, an IP due diligence examination can estimate which future costs (for example, maintenance fees, costs for already pending infringement and/or validity proceedings) must be expected, which economic value the individual IP rights have and whether the IP rights portfolio of the desire also covers the actual product range. In the case of still pending grant or registration proceedings of IP rights, the prospects of grant or registration should also always be assessed.
Finally, it is advisable to always carry out an IP due diligence before signing an M&A contract or a licence agreement.
Do you have questions about IP due diligence or do you need IP due diligence yourself? Please do not hesitate to contact us. We will be happy to support you.