Initiating a merger or acquisition is no simple task, and many variables must be taken into account.

To begin, intellectual property (IP) is extremely important in M&A deals. 

Companies often have more value in their intangible assets, such as patents, copyrights, trademarks, etc., than in their actual physical assets.

The parties to a transaction typically think that the IP rights will transfer immediately with the purchase of the entity or its business or assets and that any post-closing IP issues may be easily resolved by acquiring strong representations and warranties.

While it is crucial to safeguard the acquired IP, doing so only through a breach of representations and warranties may lead to surprises after closure that thwart or contradict the acquiring entity’s original business intentions.

One example of a company merger and acquisition with an Intellectual Property is the merger of Microsoft and Nokia in 2014. While Microsoft gained access to Nokia’s extensive patents and technology, it was discovered that there were intellectual property loopholes in Nokia’s patent portfolio. Some of the patents that Microsoft had acquired were invalid, and others were being used without permission. 

This caused legal disputes and slowed down the integration process between the two companies.

Intellectual property and mergers and acquisitions are linked because of their shared connection to the business sector.

Additionally, IP is the primary source of a company’s asset portfolio, making it an integral part of every M&A transaction. Avoiding IP exploitation during a transfer requires thorough IP due diligence.

Industrial Property and Copyrights are the two main branches of intellectual property law. Patents, trademarks, industrial designs, plant variety rights, and so on are all examples of industrial property. Any creative effort, whether artistic, musical, dramatic, etc., is protected by copyrights.

Human intellectual property is intangible. Intangible because it cannot be seen or touched, property because we may buy or sell it. The company’s key asset is its intellectual property. Intellectual property belongs to the creator and can only be used with permission. IP Rights have “Right in rem” against the globe. WIPO, a UN specialized agency, promotes global intellectual property protection.

Four main categories of intellectual property:

1. Patents: A patent is a unique legal protection for an invention, guaranteeing that no one else can copy, produce, or sell the patented product without the patent holder’s express permission. The patent system ensures the creators’ rights over their creations. A patent is a territorial right, which means that its scope is limited to a certain geographical area, and its protection period lasts for 15 to 20 years from the date the patent application was filed. Brands are a type of trademark that can also apply to services.
2. The term “trademark” refers to any word, design, or symbol that enables the vendor to distinguish themselves from competitors. In India, trademarks are safeguarded by the Trademark Act of 1999. While trademarks cannot be sold alone, they can be transferred along with the product.
3. Third, proprietary information is referred to as “trade secrets” and is protected from public disclosure. It includes any kind of mathematical or geometrical formula, plan, procedure, or pattern. The protection of trade secrets lasts forever, while patents do not.
4. Copyrights are the legal protections that authors and artists are afforded with regards to their own creative output. It doesn’t matter what form the artistic output takes (music, teaching, theater, etc.), as long as it’s original and engaging. In India, copyrights are protected by the Copyrights Act of 1976. Standard copyright terms run from the moment of creation to the copyright holder’s death, plus an additional 60 years.

In conclusion, acquiring IP is essential for protecting the interests of businesses and individuals. As long as it is handled properly, it can release enormous latent potential and aid in the expansion of the economy.

We at Acquisition Assist are dedicated to helping our clients navigate this complex landscape with confidence and ensuring they have the resources they need to protect and leverage their valuable intellectual assets. 

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