Conducting IP due diligence
Most importantly, you need to understand the technology that you are acquiring by asking the right questions to identify both technical risks and commercial opportunities.
To maximise value in IP-rich M&A transactions, you need to get under the skin of a target company’s portfolio. Most importantly, you need to understand the technology that you are acquiring by asking the right questions to identify both technical risks and commercial opportunities. In a world where technological discoveries have become a daily occurrence, AI is now a powerful tool to make due diligence faster and more efficient, and spot risks and opportunities that a human-only review might not.
In technology M&A transactions, buyers frequently find assessing the real value of their target’s IP portfolio to be a challenge. A full manual review to the required levels could take months of work or result in shortcuts in due diligence because of budget or limited time.
AI impact on IP transactions
In typical M&A IP due diligence, legal teams are often focussing on a select ‘red flag’ review. This may be limited to the assessment of ownership issues and any assignment/licence positions. The important data surrounding infringement and validity of those IP rights is sidelined in many cases due to time and cost constraints. The application of AI can help avoid the need for shortcuts. All due diligence can now benefit from the speed and cost effectiveness of an infringement/validity analysis meaning that buyers and sellers can be armed with vital data that previously would only have been available in select cases and at much greater cost and delay.
AI can now help swiftly identify factors affecting the value of a patent portfolio. If it turns out the patents are mostly invalid – you may decide to pull out of the deal altogether or chip the price. On the other hand, if the portfolio is strong and there are hidden value opportunities (for example, from suing obvious infringers), you may want to move quickly, demand exclusivity and reduce time spent on other aspects of the deal.
AI can now help swiftly identify factors affecting the value of a patent portfolio.
An AI-driven review can also identify if patents cover the target’s core products and services and, if not, whether they can be sold or licensed to third parties. It can also contribute to competitor analysis on the target’s sector to help establish the robustness of their portfolio. CMS now has exclusive access to an AI tool that allows organisations to scan the entire written internet, identifying potential infringers, assessing patent validity and performing freedom to operate searches – and all this in a fraction of the time and cost of a human review.
