DUE DILIGENCE AND BRAND AUDITS IN IP

OVERVIEW

The 21st century is an era of invention, and these innovations are vital to the expansion of the Indian economy. These inventions are all intangible assets that are the result of human creativity and have monetary value. All these fresh concepts and inventions require legal safeguards and protection. Intellectual Property Law is the legal framework for defending these innovations. These ideas either belong to a specific person or turn into an asset for a business. If a corporation owns it, the business must understand the type and extent of its intellectual property. Intellectual Property (“IP”) due diligence refers to the auditing process used to determine the value of assets that the company owns or has licenses to.

WHAT IS IP DUE DILIGENCE

The investigation to determine the value of a company’s intellectual property is known as IP due diligence. The auditing process is used to evaluate the quantity and quality of intellectual property owned by an organization or corporation. The audit also involves an evaluation of how any relevant organization or business safeguards and records intellectual property. IP is one of the most important and valuable assets for any corporation or business. A company’s value may be dramatically impacted if it is unable to use its intellectual property due to infringement by a third party.

WHY IS DUE DILIGENCE IN IP IMPORTANT?

The following are the factors which make due diligence essential in IP:

• A company can restructure its processes with the aid of IP due diligence to increase the marketability of its goods or services.
• By maximizing the value of these intangible assets, IP due diligence can improve the balance sheet of the business.
• Ignoring IP due diligence could cause the assets that need to be acquired to be overvalued or undervalued.
• IP due diligence assists in identifying risks and enables the acquirer to address the problems before closing.

HOW CAN I DO MY DUE DILIGENCE ON IP?

IP due diligence should be carried out completely and involve expert abilities. IP due diligence also aids in locating any legal concerns that might influence the value of the IP. More time is given for the completion of the due diligence research, which not only aids in establishing a more reasonable IP value but also enables proactive corrective action to be taken if any legal issues are found.

Nevertheless, each company transaction is unique and will have a unique set of needs for carrying out IP due diligence. Following are a few examples of general needs for IP due diligence:

• Identify IP assets-Patents, domain names, trademarks, and brand names are examples of intangible assets that are common to all firms and should be recognized.
• Verify Ownership and Existence of IP-During an IP due diligence investigation, ownership is one of the first topics that is investigated. Each IP asset is questioned in detail to determine the target of the company’s ownership rights in it, as well as whether those rights are unencumbered and transferable. The seller is prohibited from transferring the asset’s title and rights to third parties if the asset’s ownership is in question.
• Check for applicable territory and terms-It is crucial to confirm the validity of each IP asset, including its terms and jurisdiction. Most intellectual property rights are country-specific. Determining the regions in which IP rights are protected is crucial. Future issues could arise if a corporation that operates in numerous nations does not have IP rights secured throughout all those regions.
• Check for any Third-party claims-It makes sense to investigate any third-party interests or claims about the seller’s IP asset in addition to the ownership check. Unknowingly, rights might occasionally also accrue in favor of a third party. To determine whether any exclusive rights have been granted in connection with important IP, it is necessary to carefully review all license and franchise agreements, joint venture agreements, and memoranda of understanding.
• Evaluate potential IP infringements-When performing IP due diligence, it’s crucial to determine whether a third party is violating a firm’s IP rights or if the company itself may be violating those rights. In both situations, if the applicable intellectual property rights are subject to any encumbrance, a dispute is likely to develop and impair corporate operations.

INFERENCE

IP now days is the most appreciable asset of any company or business. IP Due diligence where will provide information about the IP of a company, within which the worth of the company can be carried. Merger and acquisition or investment are the main conditions when a company carries out then due diligence process so that the third party interested in a company can make the most of the profitable decision by investing or purchasing the business.

No matter what the composition of the IP portfolio or no matter what the type of transaction conducting due diligence enables one to identify as well as mitigate the risks involved or managed so that expectations and objectives can be met. A well-timed and properly conducted due diligence investigation can benefit both parties involved and may lead to long-term relationships and business collaborations.