Intellectual Property, or IP, is a legal minefield for businesses to navigate even at the best of times. Intellectual property law benefits competing businesses in almost every industry. It enshrines and protects original concepts, products, and designs against predatory practices and copycat IP theft. Ensuring IP rights are upheld and holding competitors accountable for IP theft can be complex. Even more complex is navigating IP issues during business mergers.

Mergers and acquisitions (often abbreviated to M&A) are integral to our capitalist business infrastructure. They can strengthen entire industries by merging great minds and compatible ideas. However, M&A can cause significant headaches for staff, especially regarding IP and IP management. This article will explore key considerations of intellectual property in M&A situations and how to navigate this challenging process effectively.

The Importance of IP Due Diligence

Before the M&A begins, businesses on either side of the transaction or process need to do their due diligence concerning IPs within their and the other business ownership. Here, legal expertise is a must-have for dissecting existing documentation and establishing correct IP ownership; without the right hand at the tiller, a million-pound IP could fall through the cracks.

Often, a business buys out another precisely for its intellectual property. There are egregious examples in every market. One business merges with another liquidates its assets, renders its staff redundant, and pockets the IPs. When a business partners or merges specifically for IP, due diligence becomes crucial. Identifying potential issues that follow IPs is essential. These issues can include restrictions on a trademark or shared ownership with a third party.

Negotiating IP-Related Terms in M&A Agreements

As a business participating in an M&A, knowing everything about IP on either side of the table is hugely beneficial for hammering out specific details in contracts and agreements. For instance, complex situations where part of a business is being bought can result in an IP being shared across it – leading to necessary discussions over joint licensing and usage covenants.

Addressing IP Conflicts in M&A Transactions

No merger or acquisition is utterly smooth, and in many cases, it is IP that slows the process. Many potential spanners can find their way into the works, above and beyond the expected difficulties managed in the contract-writing stage. For instance, there could be legal challenges as to the true owner of a given copyright, particularly where self-employed contractors have developed an idea for a business under a contract that allows them full or part ownership. This is without even discussing the post-merger possibility of copyright infringement – a rich subject for another time.