Data Verification and a role in IP Due Diligence CITMA Administrators Course Roy Scott, Senior Paralegal

What is due diligence? It is a term used when conducting an investigation of a business prior to signing a contract.

When do we conduct due diligence? When a company is involved in: Merger or acquisition (M/A) Re-financing Divestment/spin out

What is the purpose of due diligence? To value the investment To determine whether the investment is sound To assist the buyer during negotiations

What is the purpose of due diligence? Significant value in a business is represented by its intangible assets – largely goodwill in the business and IP Rights. Businesses often change hands for far in excess of the value of the physical (i.e. tangible) assets (factories, shops, stock etc). The difference in price between the value of tangible assets and the price paid is the value of the intangible assets.

What is the purpose of due diligence? Sometimes this amounts to £millions. The company paying the money needs to know what they are getting in the way of IP rights.

What will due diligence find? Assets owned or licensed Chain of title Assignment restrictions Litigation Infringements The status of the IPR Gaps in protection of the IPR

Due diligence - Who? Due diligence is usually carried out by solicitors Patent and Trade Mark Attorneys support the process for IP Trade Mark Administrators may have to: Check/prepare schedules or reports Conduct searches

Due diligence – When? M&A negotiations are usually confidential Small number of people involved You may only be informed right at the last moment Means the work may have to be done urgently

Due diligence – Role of TM Attorney A trade mark attorney may also be advising on: Gaps in portfolio (unregistered TMs) Vulnerable registrations Terms of licences: in-bound and out-bound On-going opposition proceedings Other disputes

Due diligence – Role of TM Administrator For a TM Administrator, it’s all about CHECKING the information of the trade mark and ascertaining: Status Ownership (including past changes) Recorded licences, charges, security interests liens etc Usually you’re working for the purchaser, which means you may be cross- checking information provided by the vendor. Sometimes you are looking at a ‘target’ and you may be conducting searches.

Due diligence – Role of TM Administrator Status: checking a trade mark application/registration is still in force and has not lapsed or become abandoned Ownership: Is the trade mark application/registration owned by the vendor?

Due diligence – Role of TM Administrator Other details: Are there charges or security interests recorded? These usually prevent assignment without permission This information is checked against each application/registration

Due diligence – Checking process Your work may well involve some or all of: Checking information published on: The UK-IPO database The EUIPO database The WIPO database Commercial databases Instructing overseas agents to check the details at their respective Offices

Due diligence – Reporting Providing a report of discrepancies Providing a list of actions required to correct problems

Due diligence – Working example

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