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IP due diligence

Trading IP

IP due diligence


An IP due diligence is undertaken before entering into an IP trading transaction.

Ownership and rights due diligence

Sometimes, IP is not wholly owned by the party that believes itself to be the owner.

Sometimes, some critical part of the IP may be jointly owned with another person, such as a collaborator, or a critical part may be owned by a contractor, a student, or some other person.

The purpose of a due diligence is to ensure that the IP is owned in the manner that is consistent with the proposed IP trading transaction being considered.

If the IP is owned in a different manner, and no due diligence is undertaken, the risk is that the IP that was understood to be the subject of the transaction, such as an assignment or license, is not caught by the transaction, that is, in fact is not assigned or licensed.

A due diligence is undertaken to:

  1. ascertain where ownership of the IP lies, and what rights may have been granted in relation to the IP
  1. validate that ownership and those rights by inspecting the documents that record that ownership and those rights, such as assignments etc
  1. assess what has been ascertained and validated to ensure that the IP is owned in the manner that is understood

before entering into any legal agreements over that IP.

Reference Article:

This article explains more about an IP due diligence. (Source: WIPO)

 

IP robustness due diligence

An IP due diligence may also investigate the robustness of the IP.

This means for example:

  1. the scope of the claims of a patent are assessed, and in a patent application phase, an assessment would extend to assessing whether a patent will be granted with the claims sought, or otherwise
  1. an assessment would also be made of any prospective freedom-to-operate obstacles, that is, whether the use of the patented IP might infringe a third party’s patent.