MONTHLY IPR NEWS LETTER

INTELLECTUAL PROPERTY AND MERGERS & ACQUISITIONS

Due Diligence & IPR Audit  – Need , Impact and Requirement

In this era of mergers, acquisitions and reconstruction of corporate entities, the management, protection and preservation of Intellectual Property Rights related with Patents, Trade Marks, Copyrights and Industrial Designs have acquired enormous significance. This has become relevant for Indian Business and Industry.

It is a common experience, that Indian companies and corporate entities do not give much importance to the portfolio management of their Intellectual Property Rights. It has been seen that even change of one principal officer of a company, puts its entire Intellectual Property Rights in a chaotic situation. Files, Certificates, applications and up to date information may not be traceable and organized, and when some body some day digs out these files, it is found that precious IPR Rights have been lost due to failure in renewal or non prosecution of applications or proceedings.

In the above scenario the DUE DILIGENCE and AUDIT of intellectual property rights, before Merger and Acquisitions, acquire great significance, and particularly when there is merger and acquisition of companies, also resulting in transfer and realignment of Intellectual Property of these companies. IPR is a very valuable asset .It affects the valuation of the assets of the Merging Companies and the companies which are being acquired. Here arises the need of IPR Due Diligence and Audit.

In the process of IPR Due Diligence, it is imperative to find out the Status of the Intellectual Property rights of the Company.

PATENT 

• Patent Applications , filed by the Company
• Patents Granted
• Due dates of Compliances during prosecution of the Patent Application
• Whether Proper Assignment of Patent Rights have taken Place or Not.
• Dates of Renewal of Existing Patents
• If Patent Cooperation Treaty (PCT) applications have been filed, what is the due date for entering the National Phase?

It must be remembered that for Patents, compliance of formalities during the Time frame is essential, failing which the consequences may be drastic, resulting in loss of valuable Patent rights.

TRADE MARK

• Trade Marks Registered In favour of the Company
• Trade Mark Applications filed by the Company, their stage, status etc.
• Status of Assignments and Licenses in respect of the trade mark in favour of the company and by the company.
• Whether steps have been taken for the registration of Assignments with the Registrar of Trade Marks.
• The status  regarding payment or receipt of royalties have to be also taken in to consideration
• It is also necessary to keep track of the renewals and issue of the Registration Certificates.
• It is also required that the use of the Symbol of R in a Circle is used legally also or not.

 It has been noticed that the use of the Letter R in a Circle is being done indiscriminately without proper registration of the trade marks , thereby exposing the company to criminal prosecution , imprisonment and fine . 

 COPYRIGHT

• Copyright Registrations with the company
• Copyrights owned by the company

There is a difference between Copyright Registrations and Copyright Owned.

• Facts regarding transfer of ownership of copyright to the company and the likely consequences.
• Assignment of Copyright
• Whether appropriate changes have been made in the Records of the Registrar of copyright for Registration of Assignments and Transfer of ownership.
• Does Company possess the written permissions, Assignments and No Objection Certificates from the Authors and Artists?

It is necessary to ascertain as the original owner of the Copyright is its author and artist, and further Assignment can only be carried by a written Instrument.

• The Period of Assignment / Transfer of Rights.

This also acquires significance, as under Sec. 19 of the Copyright Act, 1957, if specific period is not mentioned in the deed , the Assignment and transfer of rights is presumed to be for a period of 5 years only.

INDUSTRIAL DESIGNS

• Registered Industrial Designs
• The factual position about the prior publication of the industrial designs
• Status of Renewals and due dates of renewals

             LITIGATION 

• List of Oppositions & Rectifications filed by and against the company.
• List of  CIVIL & CRIMINAL IPR  Litigations by and against the company
• The Present Status of IPR Litigations
• Damages, if any involved
• The likely results and chances of these litigations , going in favour/ against the company , and potential effect of these decisions on the intellectual property rights of the company  
• In case of any adverse decision against the company in IPR matters , its impact on the IPR and assessment of damages in future
• IPR Litigations which have been decided / compromised and their impact.

These are some of major issues involved in Due Diligence and IPR Audit of companies, which are going ahead with the mergers and acquisitions.

 Copyright 2006, Vijay Pal Dalmia, Intellectual Property Lawyer,India

PRESENTATION BY

 VIJAY PAL DALMIA, ADVOCATE

Intellectual Property Lawyer

Supreme Court of India

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