The bargained-for exchange of intellectual property rights forms the foundation of value in many corporate transactions. However, it is often the case that purchasers and sellers do not fully appreciate the scope of rights that are to be transferred between the parties. These misunderstandings can lead to increases or decreases in bargaining power.
While every transactional attorney has a multipage, single-spaced diligence checklist, the lion’s share of IP issues fall into three categories: chain of title, scope of present and potential future protection, and freedom to practice the business interests that are involved in the transaction. This article briefly explores the three aspects of IP diligence primarily involved in a transaction weighted with intellectual property, with particular focus on chain of title and the shift of bargaining power that IP issues create.
