It is indispensable, especially for new, technology-based enterprises and other start-ups, to have a monopolistic position protected by patents in order to be able to acquire venture capital. Additionally, due diligence tests play an important role in the area of mergers and acquisitions.
As part of a due diligence test, all of an enterprise’s commercial protections are analyzed. These include patents, patent applications, licenses, trademarks, designs, and other rights. Regarding patents, it must also be taken into consideration that owning a patent alone does not give the right to produce the patented product or to apply the patented process. For this reason it is necessary to check the freedom to operate in many cases.
Among other things, the following questions in regard to patents are answered: Does the enterprise in fact have the sole right to the patent? Is the patent legally valid? How much longer is the patent valid? Is the patent being opposed by a third party? What is the extent of the territory covered under the patent? Does the patent cover the enterprise’s own product?
Similar questions are also posed for trademarks. An important aspect here are the so-called prior right agreements, which can create a considerable limitation of an enterprise’s entrepreneurial freedom. A further aspect is the examination of the genuine use of a trademark, since an unused or underused trademark can possibly not be maintained successfully on the market.
Another consideration is the evaluation of IP rights. The realization of the value of rights can occur in different ways, for example the regulation of production costs by way of license analogy or by way of estimation.