Assessment of Intellectual Property

Once the basic information on intellectual property has been obtained it is essential that a potential buyer assess the significance or worth of the intellectual property associated with a business, for example they may wish to negotiate special provisions in a share purchase agreement based on this assessment.

The following provides a list of considerations a buyer must bear in mind when carrying out this assessment:

  • Does the business actually have legal ownership of the intellectual property? i.e. does the seller have adequate control of rights created by employees or independent contractors? This is also an important consideration particularly if the seller is a large corporate group and is selling only part of its group to the buyer.
  • Have all the key brands been afforded protection in all the relevant markets? For example if the seller claims to operate internationally in relation to a particular brand, does that brand have the required protection in all the relevant markets? Â
  • When are the key brands due for renewal? Or are they even capable of renewal? What is the cost associated with renewals?
  • Are any of the IPR’s subject to litigation? E.g. are there any oppositions, revocations or invalidity proceedings in action?
  • Will the sale of business trigger any licences to become terminated? How will this impact on the conduct of the business in general?
  • Does the seller wish to share any IPR’s with the buyer, what is the most suitable structure to achieve this?

All of the above are matters that will significantly impact the value of IPR’s to a potential buyer.

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