1. Ownership of IP

Identify the IP that is material to the business and who owns the IP.

Request the sellers to provide a comprehensive list of all IP material to the business, whether registered or not.

For registered IP, such as patents and registered trademarks, conduct searches for all relevant jurisdictions.

For unregistered IP, verify that there is a clear chain of ownership.

If the IP was created by external consultants or employees, check whether they have assigned all rights to the IP (if any) to the target company under an agreement. Ensure the assignment is comprehensive enough to cover all relevant rights required by the target company to operate seamlessly after the acquisition.

Check whether important know-how is properly documented in writing and protected by strict confidentiality obligations for all parties involved.

2. Third-Party Licensed IP

Establish whether IP material to the business has been licensed from third parties.

Review the terms of the licence to ensure it is sufficiently broad to enable the target company to use the relevant IP in all key markets and there are no restrictions on its use due to a change in control or the acquisition of the target company.

3. IP Disputes

In Malaysia, you need the court case number in order to search for the case.

Obtain representations and warranties from the sellers that no IP owned or used by the target company is the subject matter of any claims, disputes or litigation.

4. Jurisdictional Protection

IP protection in one jurisdiction does not guarantee protection in other jurisdictions. If the IP is important in other jurisdictions, engage counsels in the relevant jurisdictions to conduct due diligence and ensure adequate protection.

Acquiring a company with valuable IP requires careful due diligence to ensure the target company can operate as intended and avoid potential legal issues post-acquisition.

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This post was first posted on LinkedIn on 4 January 2025.