Presentation on theme: "INTELLECTUAL PROPERTY (IP) DUE DILIGENCE"— Presentation transcript:
1 INTELLECTUAL PROPERTY (IP) DUE DILIGENCE GOPALAN DEEPAK SRINIWASK & S PARTNERSINTELLECTUAL PROPERTY ATTORNEYSSeptember 26, 2009
2 IP Due Diligence Patent Trademarks OverviewIP Due DiligencePatentTrademarks
3 IP Due Diligence and its Objectives IP Due diligence is about identifying, assessing and minimizing IP riskAddresses freedom to operate and exclusivityThe target company’s ownership and clear title to IPReduces risks of inaccurate acquisitionAllows acquirer a more negotiating roomDeeper 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 orenforceability 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 COPYRIGHTTRADEMARKS
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 PatentFreedom 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 competitorsIdentify necessary licensesFreedom to operate study: when?Before starting a new developmentJust before going to market: usually too late
9 Patent Freedom to operate study: what? Freedom to operate study: how? Granted and valid patentsPatent applicationsFreedom to operate study: how?Extensive searchLook for broad patentsPatent family and validity searchesCarefully 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 patentIdentification of possible infringementsIdentification of possible licensorsRisk 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 studyKirat Plastics Vs Cho et al. (US5,572,370)Vs
14 Industrial Designs Designs- Protects the external aesthetic / ornamental appearance or characteristics of a productJudged solely by the eye of the observer
15 Case studyPlaintiff- SAMSONITE, an US company manufactured & sold suit cases in IndiaDistinctive features: wheel, extendible handle, built-in trolley, leather trims with stitches, surface finish, design unique: ‘Samsonite System-4’No design registeredClaimed copyright in the product, its drawings = artistic work, trade dress/passing off etc
16 Case studyDefendant - 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, etcPlaintiff 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’
18 What is a Trademark? is a word, e.g. DABUR, REEBOK, KODAK, PHILIPS, TITAN, LEHAR, LAYS, LIFEBUOY, NIRMAdevice, e.g. star device, of STAR TVsign, e.g. Calvin Kleinsymbol capable of graphic representation or alphabetor 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 barriersShape of Goods/3D marks- Total image of a product and may include its size, shape, colour, texture
20 Case Study1998: 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 millionJuly 3, 1998: VW’s offer revised to US$ 790 millionNO 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 studyJuly 9, 1998: Rolls Royce PLC, the jet engine maker, puts VW on notice ofits 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 studyJuly 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 anexclusive right to use the Rolls Roycemark.BMW ENDED UP GETTING THE MOSTVALUABLE PROPERTY IN THE DEAL
26 CONCLUSIONA 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.