Step Seven for Assessing M&A Business Opportunities
Step 7. Conducting a Non-Infringement Investigation. Acquirers undertake non-infringement investigations to avoid exposure to unexpected expense resulting from infringing intellectual property that belongs to others.
Trade Secrets. Acquirer should require the contributor to document that trade secret information developed by the firm or its employees is not an infringement of another’s trade secret. The main line of inquiry at this stage is whether or not an employee who developed the trade secret may have appropriated the trade secret information from his or her previous employer.
Patents. For major products and product lines, an acquirer should conduct a patent infringement search to verify products do not infringe any issued patents. Acquirer should review any product clearance opinions received by the acquisition target. The contributor of the intellectual asset will ordinarily limit its representation to such documented opinions.
Copyrights. It is often difficult to determine if a product contains material copyrighted by a third party. To the extent that particular subject matter can be identified, such as computer software and published manuals, acquirers should require that the seller warrant to material is not copied and that any licenses required to use copyrighted material have been obtained and can be transferred. For computer software, acquirers should insist on receiving a complete audit report of software used by the acquisition target as well as copies of the licenses that are needed to use the software.
Trademark. Acquirers may contact trademark searches to verify the products being sold under a mark do not infringe the marks of third parties. One important consideration for the acquirer is the nature of plans to expand product lines into areas which raise the potential for infringement.
pgermeraad2021-10-08T14:55:06-07:00