M & A Nuggets: IP- Is it Protected?
In the wave of technology mergers the last several years, the most important asset acquired is typically the seller’s intellectual property. As purchaser, it is important that you take steps to ascertain whether the seller has legally protected its rights in that property. Intellectual Property, or IP, assets fall into two categories. One category is those assets that can or must be registered, filed, or recorded with a government agency. Those assets include patents, trademarks and copyrights. While registration is not required to use one of those assets, registration is required to solidify the rights in the asset, put the world on notice of your rights and preclude others from using the asset. Searches should be conducted of the patent and trademark records at the United States Patent and Trademark Office and of the copyright records at the United States Copyright Office. Doing business as, or trade names, can also be filed in most states. The second category of IP assets is those assets for which a recording with a government agency is not required and cannot be made. Included among those assets are know how, specifications and processes. This category of assets is best protected by having employees sign confidentiality agreements. The purchaser of a business should ascertain whether the seller has those agreements in place. So, if you intend to acquire a technology company, make sure that your seller has crossed all of its “t’s” and dotted all of its “i’s” with respect to its intellectual property.
ABOUT GLENN D. SOLOMON
Glenn D. Solomon Esq., is a principal at the law firm of Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years, with extensive experience in the purchase and sale of businesses, structuring ownership agreements, and advising companies in financial distress.
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