Registered IP
Registered IP assets are ones you will commonly have applied for using a formal process, the common ones being trade marks, patents or designs.
Consider:
- Does the company have any registered IP and if not, should it?
- Take some time to consider the goods and / or services being provided by the company and whether they would qualify for registered trade mark protection.
- Is the relevant registered IP in the correct company name?
- If not, consider assigning this registered IP so that it is in the correct company name prior to the transaction.
- Have there been any historic assignments of the company’s registered IP?
- If so, you should check that the assignment(s) has been recorded at the relevant intellectual property office(s) and whether you have a copy of the assignment(s). It is likely that copies will be requested during diligence.
- Does the company have registered IP rights in all of the territories in which it is operating?
- If not, you may want to consider exploring and expanding registered IP protection in the relevant territories.
Unregistered IP
Unregistered IP is commonly overlooked as it does not require a formal registration process. However, in this jurisdiction, assets such as software are protected principally by copyright and as such, you need to be aware how it is established and evidenced.
- Does the company have any material unregistered IP?
- If you are unsure, consider conducting a review of the goods and / or services provided by company and whether this could constitute material unregistered IP. If any material unregistered IP is identified during the above review, and it is capable of being protected by a registered IP right, consider starting the process to register this IP prior to the transaction.
- Does the company keep records showing how material unregistered IP assets have been created?
- For assets like software, it is good practice to keep records of when by whom works are created. This is commonly achieved via technical means. You should be in a position to show, upon request, when and by whom a material work was created.
Creation of IP: Employees
- Do the employment contracts contain express IP provisions which state that any IP developed by employees during their employment shall belong to the company?
- If the answer is no, you may want to consider updating the employment contracts to include provisions to this effect so that the ownership position is clear.
Creation of IP: Third Parties
- Has the company engaged third parties to develop IP for it (i.e. in the form of new software or a website)? If so, has the company entered into a written agreement with the third party which contains express IP provisions clearly stating who will own any IP arising out of the goods and / or services provided?
- One of the golden rules of IP is that the creator of the work will own it, unless a written agreement expressly specifies otherwise. Simply paying for a work does not transfer the ownership of IP. This is the most common issue which arises on transactions. If a written agreement has not been entered into, consider asking the third party to sign a confirmatory assignment which states that all IP arising out of the goods and / or services provided belongs to the company.
Domains
- Does the company own any domains?
- If the answer is yes, you should check to make sure that any relevant domains are registered in the name of the company. If the domains are registered in the name of an individual, consider amending this prior to the transaction.
Securities
- Has the company granted any securities over its registered IP?
- If securities have been granted over registered IP, you should check whether this needs to be recorded at the relevant intellectual property office(s). If it does, you should also check that the security has in fact been recorded.
Our Intellectual Property team has a wealth of experience in advising clients on a wide variety of IP-related issues. If you are preparing a portfolio company for sale and would like some further advice on how to ensure its IP portfolio is in the best shape possible, please do not hesitate to get in touch.
