Intellectual Property Due Diligence: An Overview

• Author: Brian Kolo and Lacy Kolo
• Pages: 31-59

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I. Introduction

Although due diligence on each type of intellectual property is

covered in depth later in this book, it is important to recognize

the overall process and questions that must be addressed by due

diligence counsel. Due diligence is a constantly evolving process,

and uncovering answers often raises more questions. A change in

deal terms also affects the due diligence conducted and the busi-

ness negotiations. For instance, identication of risks related

to intellectual property, such as potential patent litigation, or

risks to intellectual property validity may be used as a driver

to decrease the transaction value. Conversely, uncovering intel-

lectual property that is patentable and may cover a new product

line may increase the transaction value to the business leaders.

In addition, every attorney should keep in mind how to be

an efcient member of the transaction team. Each transaction

is a project, and basic project management techniques should

Chapter

Intellectual Property Due

Diligence: An Overview

By Brian Kolo and Lacy Kolo*

3

*I am grateful to all of those with whom I had the pleasure of working in pulling

this project together. In particular, I would like to give special thanks to Emily Josef

for her careful and thorough review of this book. I would also acknowledge, with grati-

tude, the support and love of my husband, Brian, without whom this book would not

have been possible.

32 CHAPTER 3

be utilized. The goal is always an on-time, on-budget result that

meets the business goals. For those familiar with project manage-

ment theory, there are ve types of project processes:

1. Initiating

2. Planning

3. Executing

4. Monitoring and controlling

5. Closing

For the intellectual property attorney, the key is rst to take

a 10,000-foot view of the transaction by asking the classic Five W

(5W) questions—Who, What, When, Where, and Why—though not

necessarily in that order (Figure 3.1). The answers to these ques-

tions help in planning the scope of the transaction.

II. Planning the Transaction: Ask the 5W Questions

A. The WHAT Questions

The WHAT questions are intended to help the intellectual prop-

erty attorney understand the entire scope of the deal, and to

1. The WHAT Questions

WHAT are the business goals?

WHAT is the structure of the deal?

WHAT intellectual property is being transferred in the deal?

WHAT are the budgetary constraints?

2. The WHY Question

WHY are you [IP counsel] here [working on this transaction]?

3. The WHO Questions

WHO is on the team?

To WHOM do you report?

WHO is available for responding to questions on your side and on the other side,

and what can you discuss with them?

4. The WHEN Questions

WHEN are the internal deadlines and proposed close date?

WHEN are people available, or more important, not available?

5. The WHERE Questions

WHERE are documents located?

WHERE should document requests and questions be sent?

Are there any hidden documents, and WHERE are they?

Figure 3.1: The 5W Questions