When purchasing or combining companies, the records of any IP involved must be amended to reflect their new owner. Discover where and how to start with our helpful checklist for managing intellectual property assets in mergers and acquisitions.
Intellectual property (IP) assets are some of the most important and valuable of any company. The effective management of these rights during business mergers and acquisitions is of paramount importance, therefore.
Intellectual property assets in mergers and acquisitions must be accurately managed and amended promptly, as failure to indicate the true owner of an IP asset can catastrophically undermine its protection. In this article, we provide a checklist of key considerations for efficient management of intellectual property records during a merger or acquisition.
Intellectual Property Assets in Mergers and Acquisitions—A Checklist
1. Determine a Budget
Amending IP records can be costly, so it is helpful to outline a budget before any work is started, taking into account official and agent fees/internal resources.
- Official fees: Although official fees for IP recordals are usually quite inexpensive, these fees can add up if multiple records need to be changed.
- Agent fees/internal resources: Regardless of
whether you use in-house or external services, amending IP records
can be a lengthy and potentially difficult process, and therefore
costly in terms of workforce.
Outside these necessary costs, some other expenses may need to be considered depending on the nature of the IP and the countries in which it is registered; for example:
- Translations: When companies have internationally registered IP in different languages, the need for translation is further exacerbated—securing accurate translations may be costly.
- Document legalization: When managing international business mergers and acquisitions, document legalization may be required. These formalities vary by country, so it is important to check in which jurisdictions the relevant IP is registered and budget for these varied costs.
- Late fees: Failing to record the change within
the timeframe specified by the IP office in the countries concerned
may result in a fine, the value of which increases over time.
Again, these timeframes differ by country, so it is important to be
aware of these time constraints before making any changes.
It is advisable to be fully aware of the requirements of the countries in which the IP is registered before instigating the IP recordals process, as the requirements and costs vary according to the nature of the IP and the relevant territories.
2. Assign Responsibilities
After determining the budget for amending the records of relevant intellectual property assets, companies undergoing mergers and acquisitions must then consider who they will employ to oversee the IP recordals process. Typically, the choice is between hiring an external specialist or using an existing resource in the in-house department or law firm.
Hiring an external specialist has the advantage of enabling the company to "shop around" to find the best partner for their needs. Outsourcing IP projects to an external partner will also mean that the process will likely be completed faster, as the supplier should focus completely on the process at hand, whereas in-house departments invariably have other ongoing tasks.
Ultimately, the key factor to consider when determining who will manage IP recordals after business mergers and acquisitions is whether the company would rather spend the time or money. An in-house department could potentially be cheaper, but would likely take longer. Given the risk of late fees, the slower route is not always the cheapest.
3. Organize the Project
Once responsibilities for intellectual property assets in mergers and acquisitions have been assigned, the company must then determine when to update the records. There are two routes: the records can either be managed as a whole project, or each change can be enacted individually at an appropriate time (for example, by filing changes alongside a forthcoming renewal).
Although many companies often prefer piecemeal alterations—that is, updating intellectual property assets as renewal dates arise—this can increase both the time and money spent on the merger, particularly for larger companies.
While a one-off project can appear to be a daunting task, approaching IP recordals in this way can be considerably more efficient, as it ensures that all IP records are updated with the correct information at once. Without up-to-date information, it could prove difficult to enforce IP rights effectively or could cause issues with pre-existing license agreements and royalty payments.
Effective IP Record Management During Business Acquisitions
Given the varied timeframes and differing documentation requirements a business will typically face when updating intellectual property assets after mergers and acquisitions, IP owners should consider hiring an external partner with expertise in managing IP recordals projects in multiple territories.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
