The Importance of Due Diligence Analysis - Intellectual Property
A due diligence analysis of intellectual property rights is an important step when acquiring or making a significant investment in a business. It is particularly important in the case of technology companies, where Intellectual Property Rights are assets that account for almost all the value in a business. A due diligence analysis provides an appraisal of a business’s assets and liabilities and helps to identify any potential problems.
Subjects for Consideration & Evaluation:
- Trademarks – if there are any registered trademarks, it will be important to determine whether the goods and services declared at the time of registration adequately match the operational reality of the business as well as whether the reported date of first use is correct. If the registration date does not match the actual date of first use, than the registration can be invalidated. Trade-marks Act
- Patents – Patent rights generally belong to the inventors, unless a written agreement states otherwise. Be sure to examine all agreements with inventors as there may be many cases where the inventors have granted shared rights to multiple businesses. Patent Act
- Copyrights – The presumption is that all work (including computer programs) created/made during the course of employment are the property of the employer. However, there is no such presumption if the work was made by a subcontractor or a consultant. Copyright Act
- Administrative or Judicial Proceedings - Verify that there are no proceedings that could affect any intellectual property rights and there are no third party infringement claims that have been made either verbally or in writing.
For more information Trademarks, Patents, and Copyrights, visit the Canadian Intellectual Property Office Website
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Original article source: Intellectual property due diligence in an investment context