Taking Inventory

Disorganization is one reason that companies give incomplete lists of intellectual property, particularly if there isn’t a point person managing those assets. “It’s not that they’re trying to hide things—they just don’t know what they own,” says Lori Wiese-Parks, a partner at law firm Gray Plant Mooty, P.A. in Minneapolis.

Or a company might not realize that some of their knowledge constitutes valuable intellectual property. “They might have a list of their copyrights and patents, but they don’t track proprietary information that is valuable to them and could be valuable to a competitor,” says Carolyn Sandberg, a partner at Minneapolis law firm Lindquist & Vennum, PLLP.

Other companies do recognize the value of their intellectual property but may be nervous about sharing it while a potential suitor can still back out of a deal. “Sometimes people are very reluctant to give you information,” Hemphill says. “You might be their biggest competitor, and there’s a tension between the need to get the information and . . . the company’s anxiety that the information might escape or be misused.”

On the other hand, Hemphill says, “some people are just paranoid.” A confidentiality agreement between the acquiring and targeted companies can create ease. So can a progressive arrangement, in which information is released gradually as the deal nears finalization.

Once a list of intellectual property assets—however incomplete—is in hand, the next step is to check it against public records on a variety of public and private databases. The United States Patent and Trademark Office allows searches of American patents and trademarks. For European and some other overseas patents, log on towww.espace.net. The Japanese patent office maintains an English language page at www.jpo.go.jp. All these resources are free. There are also subscription databases for patent and trademark searches, including the Derwent World Patents Index, Delphion, and LexisNexis . An intellectual property attorney can typically do these searches.

This first level of research should reveal a few things. First, it will provide a list of what the target company actually owns, or to which it has a license or other rights. Second, it should reveal to what extent the company has kept track of what it owns and attended to the bureaucratic details of registering and maintaining patents—for example, paying periodic fees and registering changes of ownership.