Why is it essential to have an IP firm working alongside your company from the start and also as it grows? Companies do not realize how ubiquitous IP issues can be and how simple maintenance and upkeep can help streamline bigger processes.  Seemingly non-IP milestones during a company lifecycle, such as acquisitions, licensing, and international expansion, almost always involve aspects relating to some form of Intellectual Property. Proactive planning in your IP processes can eliminate headaches and extra work down the road. Without it, corporations often find themselves rushing to put out fires that could damage their reputation, their firm’s value, and even some form of liquidation event. 

Many companies do not understand just how far-reaching IP is. For example, it often starts with an employee/human resources issue concerning ownership and assignment obligations or trade secret responsibilities. Further along, it becomes a technology-heavy issue relating to your research and development organization and associated product development efforts. Later, it implicates third party interactions such as joint development agreements and licensing.  And all along the way, the branding and marketing of your products implicate their own IP issues.  

During mergers, acquisitions, and other technology transfer events, IP and particularly, patent ownership problems regularly present themselves. I regularly work with large corporate clients that acquire smaller companies, and each time, the transfer of ownership of both US-based and global trademarks and patent applications has been a primary administrative concern during the transaction. In the US, it is not a hugely challenging process because we control and are intimately familiar with the laws and paperwork involved, but the same rules do not apply to global transfers and the laws of each individual country in the mix.

In many foreign jurisdictions, the paperwork, legalization, and document formalization requirements can be exceptionally onerous. The Japanese patent office, in particular, will not accept a generalized merger document as an assignment. Many countries require “legalized” documents for recording, which often require signatures and “gold seals” from the US State Department or a foreign embassy.  If you do not have the right materials and processes put in place during that foreign IP transfer transaction, or the wrong owner is still listed in a national patent and trademark office because it wasn’t corrected along the way, it can be particularly challenging to correct after the fact.  Or at least time consuming, which is usually not a luxury during an acquisition.

We regularly see, particularly within merger or acquisition paperwork, a small paragraph buried in the broader document that says, ‘All patents or trademarks are hereby transferred from one company to the other,’ and this often does not fly for international ownership transfers. When we record new assignments and change the ownership for those pieces of property, the better practice is to provide a separate document that shows the transfer happened or at least have each specific piece of property itemized on the schedule. When that document is just a paragraph and not separate and distinct from the overall acquisition transaction, we have to create a whole new document or have a foreign associate do the same to comply with local rules.

With new documents come new signature requirements, and many times the corporate leadership has already changed, so getting them re-executed becomes a problem or impossible. If we had been alongside to offer advice from the start, we would have assisted the acquiring company in writing the correct documentation from the get-go. 

Related: Is Your Startup Making These Mistakes With Your IP?

We routinely receive panicked last-minute calls where a company is about to receive investment money or is undergoing a diligence activity. And oftentimes, we aren’t even made aware that an acquisition is taking place until the deal is done, or more commonly, when someone realizes that the “merger document” did not include the proper provisions to make the actual recordation of the new owner simple or even effective.  At that point, we are asked to scramble to file the documentation and make it right.

Short Shelf-Life

Aside from the paperwork hassles identified above, IP rights have short shelf lives, and if you do not take action within a particular time frame, you can lose your rights. For patents, in particular, there are critical dates that must be adhered to after certain events happen in a company’s life. After your idea has been in the public domain for more than a year, it can generally be used by anybody without any recourse. All of your hard work, all of your company value that may be based on one patent application, will be lost forever.

Luckily, the trademark world is a little more forgiving and allows you to file even after you have been using the trademark for a while. However, in trademark law, your rights are determined by who first used the mark. So even though you might have used it early, if you haven’t filed it, it creates a messy situation to try and recover rights if someone else applies for the same thing.  What should have been solely an administrative event is now a quasi-litigation and usually adversarial in nature, adding exponentially to the cost.

Having an IP specialist on board in an advisory role to educate your company on filing dates, get those dates on a calendar, and make sure everyone is aware of how these processes work, has proven to be extremely valuable to our clients over the years, even if just to course correct to avoid these seemingly small administrative issues. 

For that reason, we often offer to sit in on client board meetings and other early strategic sessions for no cost so that we can help you steer clear of these issues.

Related: Protecting Your Intellectual Property Operating, Employment, and Founders’ Agreements

My Top Three IP Paperwork Tips to Know

  • Do not put your IP, patent, or trademark applications on the back burner. Doing the paperwork early does not have to be expensive. 
  • If you’re undergoing an acquisition, either being acquired or you plan to purchase another company or its IP assets, that is an excellent point to get us involved so we can help you create cleaner paperwork. It’s that simple. 
  • If you are in the early stages of developing technology or brands, let us help create processes for you so that you can capture the right information and not get into a scenario where you’re potentially losing rights.


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