IP Concerns in Healthcare Mergers & Acquisitions
Unlocking the true value of a target company’s intellectual property (IP) is crucial in any M&A transaction. That’s why, at the start of any deal, we conduct a thorough IP due diligence process to ensure the validity and completeness of the IP assets.
This includes verifying the validity and proper registration of the target company’s IP assets. Also, check for any outstanding legal disputes or infringement issues. Healthcare M&A transactions, such as the acquisition of a pharmaceutical company, require extensive intellectual property validation and verification.
Healthcare intellectual property concerns include:
- Patents on chemical compounds for pharmaceuticals, such as small molecules and biologics
- Trademarks on brand-name drugs
- Trade secrets and privacy rights in the patient list.
Intellectual Property In Healthcare M&A
Our goal during IP due diligence in healthcare M&A is to thoroughly review and validate the intellectual property assets of the target company. This includes verifying the validity of patents on chemical compounds, trademarks on brand-name drugs, and trade secrets and privacy rights in patient data. It is crucial to uncover any potential fraud or copyright infringements in order to protect the interests of the acquiring company and ensure a smooth transaction.
Additionally, we need to verify the proper filing of ownership rights in IP to confirm that the target company has the legal right to license or transfer these assets. Any issues with the target company’s IP that are uncovered during the due diligence process could raise red flags and potentially jeopardize the deal or even lead to the termination of the transaction.  By performing thorough IP due diligence, we can minimize the risks and ensure that the deal is structured in a way that is beneficial for both parties involved.
When engaged in healthcare transactions, we must consider how the rights of IP transfer. In an asset deal, we may not need to indicate the transfer of IP in the purchase agreement. The transfer of rights is assumed with the sale of the business. In a stock sale, the IP ownership rights remain with the acquired company. However, we must record all IP rights when there is a change in ownership. A delay in recording may result in the loss of royalties, which could be a significant financial loss.