IP Records management checklist for mergers and acquisitions

Intellectual property (IP) assets are some of the most important and valuable of any company, and as such, the effective management of these rights during mergers and acquisitions is of paramount importance. When purchasing or combining companies, the records of any IP involved must be amended so as to reflect their new owner.

These IP records must be accurately managed and amended promptly, as failure to indicate the true owner of an IP asset may lead to diminished or even absent protection. When undergoing a merger or acquisition, there are some key considerations to bear in mind regarding the management of intellectual property records.

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1) Determine a Intellectual Property records Budget

As the amendment of IP records can be costly, it is important to outline a budget before beginning, taking account of the following.

• Agent fees: regardless of whether you use in-house or external services, the amendment of IP records can be a lengthy and potentially difficult process, and therefore costly in terms of workforce.
• Official fees: although official fees for alterations are usually quite inexpensive – for example, amending the ownership of a trademark in the UK costs £50 – these fees can add up if multiple records need to be changed.

Outside of these necessary costs, some other expenses may need to be considered depending on the nature of the IP and the countries in which it is registered.

• Translations: when companies have internationally registered IP in different languages this need for translation is further exacerbated – securing accurate translations may be costly.
• Document legalisation: when working on international mergers and acquisitions document legalisation may be required. These costs differ according to country – it is important to check which countries the relevant IP is registered in and budget for these varied costs.
• Late fees: failing to record the change within the timeframe specified by the IP office in the countries concerned may result in the imposition of a fine, the value of which increases over time. Again, these timeframes differ by country so it is important to be aware of these time constraints before making any changes.

It is advisable to be fully aware of the requirements of the countries in which the IP is registered before instigating the amendment process, as the requirements and costs vary according to the nature of the IP and the relevant territories.

2) Who will complete it?

After determining the budget for the amendment of the relevant IP records, companies undergoing mergers and acquisitions must then consider who they will employ to oversee the process. The most obvious quandary is the choice between hiring external counsel or using an in-house department. Hiring external counsel has the advantage of enabling the company to “shop around”, giving them the benefit of being able to find the counsel which is best suited for their needs. Hiring external counsel will also mean that the process will likely be completed faster, as they will be able to focus completely on the process at hand, while in-house departments invariably have other ongoing tasks.

Although hiring external counsel may drive up the costs of the operation, this is likely to be worth it, particularly for larger companies with an expansive IP portfolio.

Ultimately, the key factor to consider when determining who will undertake the operation is whether the company would rather spend the time or money. Hiring external counsel is likely to make the process more expedient, but it would cost. An in-house department would likely take longer but could potentially be cheaper. However, as previously mentioned, the imposition of late fees must also be borne in mind – the slower route is not always the cheapest.

3) How will it be done?

Once the appropriate agents have been decided upon, a company undergoing a merger or acquisition must then determine how they want their records altered. There are two routes – the records can either be managed as a whole project, or each change can be enacted individually.

Although many companies often prefer piecemeal alterations – that is, filing changes alongside the renewal of respective IP assets as the renewal dates arise – this generally increases both the time and money spent on the merger, particularly for larger companies.

Despite a project being an ostensibly daunting task, this organisation at the offset pays off, as it ensures that all IP records have up to date information at once. Without up to date information, it is difficult to effectively enforce IP rights, as well as potentially causing issues with pre-existing license agreements and royalty payments.