Patents, trademarks, designs, and other forms of intellectual property (IP) play a key role in the success of all modern businesses. By providing a company with legal means to prevent others from copying an invention, a trademark, or a product, intellectual property rights allow inventors and creators to obtain a return on their research and development investments and to maximize the potential of their enterprises.
Both directly and indirectly, consciously or unconsciously, IP will play an important role in the future success of any company. The value of a company's brand or its portfolio of products or innovations are key value differentiators, providing many strategic reasons for initial and ongoing investments. In order to capture this value, however, investors must be sure that their target companies maintain their IP assets, including the protection of intangible assets and the maintenance of related rights and registrations up to date and in force. IP lawyers can – and should – be increasingly involved to support investors during the valuation and due diligence phases of a potential investment. Typically, this will include: IP Audits to assess the validity and extent of the existing and potential IP rights of a target company; Due diligence to ensure the correct chain of ownership and to identify the existence of potential objections or claims by third parties.
Obtaining IP to attract new investors
However, before investors reach the due diligence stage, most will begin by examining potential investment opportunities from an IP perspective. Therefore, companies seeking to attract venture capitalists, private equity firms, or even industry grants and loans, would do well to focus on acquiring and strengthening their IP assets even before managing the process of seeking external funding or investment. Depending on the company, this typically includes some questions that should be addressed to internal stakeholders: Have patent rights been established for all fundamental inventions, including defensive registrations if relevant? Have the company or product brand and/or visual appearance been protected as trademark/design rights in all key jurisdictions? Is the ownership of the IP clear and up to date; for example, where it was created by multiple stakeholders or passed from one company to another? How crowded is the market and technological space for any new/fundamental inventions: is there a risk of an infringement claim by third parties? Where does the IP stand in relation to competitors' activities: does the portfolio need to be reinforced with additional filings? Does additional IP exist in the business that has not yet been protected? How do the strengths and weaknesses identified in the IP portfolio affect the value and potential of a company? In an ideal world, IP will have been diligently captured, maintained, and registered as a company grows and expands; unfortunately, this is not always the case. By neglecting their core assets, however, companies risk short-changing themselves when it comes to attracting investment and maximizing their future chances of business success. It is also important to remember that not all IP exists as registered rights, and therefore an assessment of all company documents will generally be necessary to identify other valuable intangible assets, such as copyright or confidential information, licenses, or distribution rights.