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

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Presentation on theme: "INTELLECTUAL PROPERTY (IP) DUE DILIGENCE GOPALAN DEEPAK SRINIWAS K & S PARTNERS INTELLECTUAL PROPERTY ATTORNEYS September 26, 2009."— Presentation transcript:

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

2 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? 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? 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?


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