Such as employment or investment in mergers and acquisitions (M & A "), perform due diligence on patents, according to standard procedures of the M & A attorneys and investment bankers? If patents are an important aspect of the transaction value, probably" Get Re incorrect advice, as exercise due diligence. The due diligence is taken into account, the competitive landscape of the patent. If the patents are not competitivein the evaluation, the target company can be overestimated significantly.
For many years of experience in intellectual property and patents have been involved in a number of M & A, in which the patent was an important part of the underlying transaction. As a specialist patent for these steps, I was paid to M & A attorneys and investment bankers who were from the C-level management are recognized "trueExperts "because they have completed dozens of transactions per year. To this end, we have specialists in the field of patents have been directed to the following patent check boxes 4" due diligence checklist:
Patents are granted by the Patent Office?
If the seller has its own patents?
Make at least some of the claims relate to products of the seller?
Counsel for the seller to make silly mistakes that the patent difficult to sue for patent law before the court to make, would?
If these fields were marked"Complete" on the checklist of due diligence, M & A attorneys and investment bankers were in fact "CYA'd" patent issues and are free from liability for patent in the transaction.
I have no doubt that I have my homework due diligence done competently patent, and that I had "CYA'd" me into this business. However, it is clear that correspond to the granting of patents for M & A Due Diligence, in essence, an idea of how to do something stupida transaction patent. In truth, I do not trust myself with the bridge "feel for a patent due diligence, but I have no decision making powers at odds with the standard operating procedures for M & A experts. And I discovered that it is incomplete, the standard patent due diligence process was when I left, to the shards of a transaction under the M & A conventional method.
This is my client, one of the largest producers and tried toexpand the supply of non-commodity for the acquisition of "Clean Care, a small manufacturer of a patented product for the consumer. CleanCare My client turned out to be a good target for acquisition because the product meets CleanCare strong consumer demand, and ordered this time, he for a higher price in the market. With the acceptance by consumers for its unique product has been CleanCare continue to experience exceptional growth in sales and growth. However CleanCare had only one production for smalland was difficult to meet growing market needs. Clean Care in venture capital investors are also eager to cash after several years of continued funding for the operation in a small margin "of society. The wedding of my client and then CleanCare seemed a good match, and the M & A due diligence process has begun.
Clean Care due diligence had revealed that few possessions: a plant for the production of small, limited, but growing, sale and distribution of several patentson CleanCare unique product. Despite these activities, seemingly small, CleanCare asking price up from 150 million U.S. dollars. This price could only mean one thing: the value of Clean Care is only in the potential growth of sales of its patented product available. In this scenario, the exclusive product Clean Care is seen as fundamental for the purchase. That is, if someone could knock off CleanCare prevail differentiated products, and competition would be LLParis is the holding company for growth and revenue forecasts to drive the basis of financial models made the purchase.
Take my statements of M & A lawyer and head of investment banking in the operation I took aspects of the patent on the process of due diligence in accordance with normal procedures. All check-out. Clean Care possession of patents and had always paid the taxes. Clean Care patent had good work on patents: do size CleanCarewas protected by patents, and it is not obvious legal errors made in obtaining patents. So I gave the transaction a thumbs up in the form of patents. Although everything seemed to be positive, my client has the proud owner of Clean Care and products.
Fast forward several months. . . . I started receiving calls from visitors, the marketing team of my client based Clean Care product with competing products that have been observed on Earth. GivenMore than 150 million U.S. dollars were not spent for the acquisition CleanCare surprising that these marketing experts believe that competitive products will be infringing on patents Clean Care. However, I discovered that each of these products has been patented in a design competition, the legitimate product placement Clean Care. Since these knock-offs are not illegal, my client had no means to hit them from the market for competitors to take legal action.
Following thisincreasing competition for the product CleanCare began to occur in prices. To erode the financial projections, which began as a basis for the purchase of my clients Clean Care. The product sells CleanCare still strong, but should not interfere with this unexpected competition, the margins charged my client and investment CleanCare much longer and more costly marketing. In short, so far seems to be the acquisition of 150 million U.S. dollars CleanCare into a fiasco.
InIn hindsight, the competition was expected to be the product CleanCare during the M & A Due Diligence. As we later would appear a literature search on patents, that there are many different approaches to consumers confronted by the product of Clean Care. Clean Care of success on the market now seems to be due to the advantage of offering the first, in contrast to the real economic and technological advantages that the product will be.
If I knew what I know now, Ido not recommend that sell the product expectations Clean Care at a higher price because of market exclusivity. Instead, I want available to the team of M & A of the competition in product markets CleanCare was and show in fact, very likely, as we found a variety of solutions for the same problem mentioned in the patent literature. This can still happen, but I think the fact that the financial models driving the acquisition would be based. AsTherefore, my client has a marketing plan, based on the insight that competition is not only possible but expected to be developed. The marketing plan was then the offense than on defense. And I know that my client did not expect that on the defensive after more than 150 million U.S. dollars, for the acquisition Clean Care.
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