1. INTELLECTUAL PROPERTY (IP) DUE DILIGENCE
GOPALAN DEEPAK SRINIWAS
K & S PARTNERS
INTELLECTUAL PROPERTY ATTORNEYS
September 26, 2009

2. IP Due Diligence Patent Trademarks
Overview
IP Due Diligence
Patent
Trademarks

3. IP Due Diligence and its Objectives
IP Due diligence is about identifying, assessing and minimizing IP risk
Addresses freedom to operate and exclusivity
The target company’s ownership and clear title to IP
Reduces risks of inaccurate acquisition
Allows acquirer a more negotiating room
Deeper insight into the target’s liabilities

4. Due Diligence from Buyer’s Perspective
Does target company have any IP problems?
– Confirm what you are getting (IP audit)
– Is there anything affecting the target’s title in or
enforceability of the IP?
– What third-party rights affect the target’s IP?
– Does anything affect the value of target’s IP?
Due diligence analysis allows buyer to:
– Draft transaction documents appropriately
– Restructure deal
– Re-negotiate price
– Back out of deal

5. IP Assets IP assets in transactional due diligence: PATENTS DESIGNS
COPYRIGHT
TRADEMARKS

6. What are Patents? Patent- An industrially useful invention;
Which is new and not part of the public domain;
Confers upon the patentee monopoly in the use of the invention for a fixed period;
Protects the workable idea and the concept of an industrially useful invention.

7. Patent
Freedom to Operate (FTO)
Can I market my product?

8. Patent Freedom to operate study: why? Freedom to operate study: when?
Avoid being attacked for infringement by one or more competitors
Identify necessary licenses
Freedom to operate study: when?
Before starting a new development
Just before going to market: usually too late

9. Patent Freedom to operate study: what? Freedom to operate study: how?
Granted and valid patents
Patent applications
Freedom to operate study: how?
Extensive search
Look for broad patents
Patent family and validity searches
Carefully analyse patent claims
“Old” patents are disregarded (> 20 years)

10. Patent Freedom to operate study: result
One or more patent families with legal status, time and geographical limits of each patent
Identification of possible infringements
Identification of possible licensors
Risk assessment

11. Patent Freedom to operate study: actions
+ continue the development as planned
+/- modify the solution
+/- accept the risks
- negotiate licenses
- abandon, change direction

12. Case study
Kirat Plastics Vs Cho et al. (US5,572,370) Vs

13. Case study
Design Patents of Kirat Plastics

14. Industrial Designs Designs-
Protects the external aesthetic / ornamental appearance or characteristics of a product
Judged solely by the eye of the observer

15. Case study
Plaintiff- SAMSONITE, an US company manufactured & sold suit cases in India
Distinctive features: wheel, extendible handle, built-in trolley, leather trims with stitches, surface finish, design unique: ‘Samsonite System-4’
No design registered
Claimed copyright in the product, its drawings = artistic work, trade dress/passing off etc

16. Case study
Defendant - Vijay Sales, manufactured & sold ‘ODYSSEY 700 GLX’
The suit case of Defendant similar to that of Plaintiff in having dark green tan leather band, inside similar, etc
Plaintiff has no proprietary rights to get up, appearance, features of the products- no evidence from public that they identify this product with its shape, appearance, no distinctive features: Plaintiff admit that public recognition is by brand name ‘Samsonite’

17. Case Study
Samsonite Vs VIP

18. What is a Trademark? is a word, e.g. DABUR, REEBOK, KODAK, PHILIPS,
TITAN, LEHAR, LAYS, LIFEBUOY, NIRMA
device, e.g. star device, of STAR TV
sign, e.g. Calvin Klein
symbol capable of graphic representation or alphabet
or numerals (555) or a combination of the above
(INCLUDES PACKAGING LAYOUT/GETUP/COLOUR SCHEME)
indicates the origin of goods and services distinguishes the same from those of others

19. What is a Trademark? Colours- Popular and practical; overcome
language barriers
Shape of Goods/3D marks- Total image of a product and may include its size, shape, colour, texture

20. Case Study
1998: Vickers Plc decides to sell Rolls Royce Motor Cars Ltd.
Two bidders
- BMW: Manufacturer & supplier of engines & other components for Rolls Royce & Bentley Cars
- Volkswagen (VW)

21. Case study March 30, 1998: BMW offers US$ 560 million
May 7, 1998: VW offers US$ 710 million
July 3, 1998: VW’s offer revised to US$ 790 million
NO DUE DILIGENCE DONE

22. Case study VW believed the transaction gave it rights in:
An aged manufacturing plant at Crewe;
2,400 skilled workers;
Bentley Trade Mark;
Rolls-Royce Trade Mark;
Continuous access to engine supply

23. Case study
July 9, 1998: Rolls Royce PLC, the jet engine maker, puts VW on notice of
its ownership of the Rolls Royce Trade Mark since 1973;
its licence of the Rolls Royce mark to Rolls Royce Motor Cars Ltd., subject to a clause “licence would terminate if Rolls Royce Motor Cars ceased to be UK-owned”;
Post acquisition by VW, a non-UK buyer, reversion of the Rolls Royce mark to Rolls Royce PLC.

24. Case study
July 9, 1998: BMW having paid Rolls Royce PLC £ 40 million for rights of licensed use to the Rolls Royce name & mark, puts VW on notice of:
its newly acquired rights in the Rolls Royce marks;
intention to terminate the engine supply agreement after 12 months.

25. Case study Post Jan 01, 2003: BMW to own rights
to manufacture Rolls Royce cars and an
exclusive right to use the Rolls Royce
mark.
BMW ENDED UP GETTING THE MOST
VALUABLE PROPERTY IN THE DEAL

26. CONCLUSION
A proper IP due diligence conducted in good faith is an indispensable key to achieving the objectives of the seller and purchaser in the most cost effective and time bound fashion.

27. Thank you
Questions?