知识产权尽职调查：使其具有战略意义.doc

IP due diligence: Make it strategicPosted on December 15, 2007 at 3:15 PMFiled under: 2007 | BEST PRACTICES | INTELLECTUAL PROPERTY | NOV.-DEC. 2007 | THE MAGAZINE Tagged: COMPETITIVE INTELLECTUAL PROPERTY , CORPORATE DEALMAKERS , DUE DILIGENCE , INTELLECTUAL PROPERTY , PATENTS , PRIVATE EQUITY , STRATEGIC , STRATEGIC IP , SWOT 窗体顶端窗体底端A medical devices manufacturer was seeking a large amount of expansion capital, and the investment looked attractive. The company had received Food and Drug Administration approval of its diagnostic system, which would allow it to enter a $1 billion-plus womens health-market segment. Major distribution agreements were in place. Attorneys for the potential investor completed due diligence on the companys intellectual property in the traditional manner and found it had valid, enforceable patents covering its core technology - the diagnostic system. They also completed a product-clearance search and rendered a favorable freedom-to-operate opinion; the system did not appear to infringe the patents of others.But a green light to invest was not in order. A more comprehensive look at the companys IP position identified significant business risks. The business plan and financial statements indicated the company was pursuing a razor-and-blades business model whereby the diagnostic system would be sold at or near cost and the main source of profit would be high-margin consumables. Yet there was minimal IP protection of the consumables or of the way the consumables interacted with the diagnostic system. Competitors could easily enter the market with cheaper consumables and take advantage of the companys installed base of diagnostic systems.Whats more, the company had not filed any additional patent applications for several years. Interviews with the senior management team revealed that the founder-CEO - the main inventor - was increasingly occupied with running a growing business. The company had missed many opportunities to protect technologies valuable to its future; now competitive patents were blocking its technology road map. The investor brought these issues to light by taking a strategic approach to intellectual property due diligence - linking the companys intellectual property to its business. That goes well beyond the legally focused approach many investors and acquirers rely upon, which is necessary but often not sufficient for making a good investment decision.The primary purpose of any due diligence is to obtain sufficient information regarding the target company - including its strengths, weaknesses, and critical business drivers - to allow an investor to decide whether to proceed with an investment, and if so, on what terms. In many cases, the intellectual property of the company is reviewed, since it, too, is a key asset of the company. Legal counsel typically performs a due diligence review of the intellectual property assets of a target company. This very important review considers issues such as identifying the specific intellectual property assets, determining their ownership rights, assessing the breadth of intellectual property coverage, evaluating the validity of the intellectual property rights and reviewing any licensing rights the target company grants or bestows. This review is critical to the success of many deals, and many transactions have either been terminated or terms have been significantly altered as a result of lawyers findings.Still, this is a tactical review that considers the strengths and weaknesses of the discrete intellectual property assets, and possibly the portfolio as a whole. What dealmakers also need to consider is how the IP assets relate to the business of the target company and the investment thesis itself. The IP profile of a company is more than just a portfolio of legal rights to be used as a defensive tool. A strategic review of intellectual property considers not only whether the target company has good patents, but more importantly, whether it has the right ones. Strategic IP due diligence consists of four key analyses. These analyses examine how IP is aligned with the targets business objectives; the strength of the targets IP portfolio; the IP positions of competitors; and how well the target company manages its intellectual property. Lets look at each in turn.1) Assessing intellectual property alignment. This is an evaluation of whether a companys IP portfolio aligns with or supports its business objectives - more specifically, whether it supports the technological competitive advantages associated with current and future revenue sources. Assessing the state of alignment can provide valuable insight as to whether a company has a sound strategy for developing, managing, and exploiting its intellectual assets. Alternatively, the assessment may show whether an organization has an ad hoc IP portfolio that leaves it exposed to competitive risks.For example, a syndicate of venture capital investors had executed a term sheet to invest in an early-stage consumer electronics company, New Co. New Co. had developed an innovative suite of products that would revolutionize the industry and had already received early indications of product acceptance. However, it would be three to five years before meaningful revenue would be generated. So an entry level, near-term product had been developed that would generate revenue today, begin to establish New Co.s brand in the marketplace and establish distribution partnerships necessary for the successful launch of its flagship product in the future.Strategic IP due diligence performed on behalf of the investor syndicate found substantial opportunities to further enhance the investors potential returns. New Co. had adequately protected its flagship product through several issued patents and pending patent applications. However, many opportunities for intellectual property protection were identified across its value chain. By better protecting the entire value chain rather than just the core product, New Co. could then strategically leverage its intellectual property portfolio in agreements with suppliers and distributors. This would lower its cost basis and provide it with additional competitive advantages.On a less favorable note, New Co. had no IP protection for its near-term products and resulting revenue stream, and they were to be launched into a competitively active patenting environment. There was no certainty as to what, if any, patent protection New Co. would receive for its entry-level product.The upshot was that the syndicate made the investment under revised terms, providing funding in tranches contingent upon the development of an IP strategy that addressed both the IP opportunities and risks.2) Assessing intellectual property strength. Assuming the IP is aligned with business objectives, is the portfolio also strong? The strength of a patent (and patents are what were usually dealing with) should be assessed in two ways. A legal analysis, conducted by attorneys, includes an opinion interpreting the issued claims of the patent and indicating what the patent can reasonably be presumed to protect, and how well. This is complemented by a technical strength assessment, which includes a methodical analysis to determine whether the problem solved by the patented invention can be solved in any other way. In other words, how likely is it that a competitor could invent around the technical embodiments of a companys patent? For example, Big Co., a large, established consumer products organization, had agreed to acquire Small Co. on the basis of a particular consumer product. Big Co. was very interested in this product because it filled a valuable need in a large and growing market. Furthermore, Small Co. had indicated that the product was patent-protected and that it essentially owned the technology space.Upon completion of a strategic intellectual property due diligence, it was confirmed that Small Co.s patent portfolio was aligned with its business - the patents clearly protected its products. However, a detailed evaluation of the patents by engineers skilled in the relevant technology revealed a significant concern: Small Co.s patents protected the exact technical embodiment of the product down to the number of gears, screws, levers and springs. Small Co. had successfully executed an intellectual property strategy that had provided it with the freedom to manufacture and sell its products, but it did not have the intellectual property protection to stop others from commercializing similar products.The story ends badly for the target. Big Co. realized it could easily invent around Small Co.s patents, manufacturing a product with an alternative arrangement of gears, screws, levers and springs, at a similar cost basis and without sacrificing quality. Since it could enter the market without incurring the costs of acquiring Small Co., Big Co. ended all acquisition discussions. Identifying an invent-around doesnt always produce a negative outcome. Often, an invent-around can be used proactively as the basis for powerful new patent filings.3) Assessing competitive intellectual property. The pictures not complete without a review of competitive IP. This means more than an examination of patents directly in the prior art that may either read on the companys products or invalidate its patents. Whats needed here is a comprehensive competitive analysis of the technology space derived from the patent literature. There are four main goals: to identify which companies are IP competitors; to establish trends in the patenting activity; to evaluate what technologies are being patented; and to determine where along the value chain patenting activity is taking place.For example, a large technology company was spinning off a division, Spin Co., whose technology and products no longer aligned with the parents business strategy. Patent counsel had conducted a prior art assessment with positive results, and patents were applied for based on Spin Co.s new technologies.But a broader analysis revealed some risks. Spin Co. was entering a heavily patented space with well-capitalized, litigious companies, many unknown to Spin Co. A positive prior art opinion from legal counsel is no guarantee against infringement litigation in such a situation. Spin Co. had no issued patents to bring to such a fight, only pending patent applications. Realizing that Spin Co. faced a tougher launch than anticipated, the parent company wisely postponed the spinoff until a more secure IP position could be established.Fortunately, several of the previously unknown competitors were also potential strategic acquirers of Spin Co. By examining the portfolios of these potential acquirers, Spin Co. was able to develop an intellectual property strategy that not only aligned with and supported its own business objectives, but also resulted in a portfolio valuable to and complementing several of the potential future strategic acquirers.4) Assessing intellectual asset management processes. Sound intellectual asset management processes are critical to the continued development and strategic use of existing and future intellectual property. Without them, the pipeline of ideas within a company does not systematically result in the codification of intellectual assets (invention disclosures, patents, trade secrets, etc.) that can be protected, managed and leveraged by executives.Formal IAM process implementation by an IP-savvy organization reduces ad hoc IP development and increases the potentially valuable intellectual assets that get documented, managed and ultimately monetized. The quality of a companys IAM processes reflect its ability to protect and commercialize its innovation.For example, a venture-backed medical devices technology company, Med Co., had received Series A funding based on FDA approval for its tissue-engineered medical device. The company had perfected stringent manufacturing practices to the specifications the FDA demanded. No changes were planned, because the company wished to avoid any subsequent FDA review. Although Med Co. was conducting fundamental research for its next-generation product, it was no longer pursuing intellectual property protection of advancements to its current product, which would help establish additional barriers to entry. Med Co. had no strategy to guide its intellectual property development or management, had not documented trade secrets or put in place adequate measures to prevent their disclosure and was unaware of the competitive patenting environment.Even with its limited resources, though, Med Co. was able to develop a high