Understanding Your Patent Portfolio, Reducing Risk Through Due Diligence

by Leslie Gladstone Restaino

The explosion of Life sciences innovation and the globalization of the marketplace have heightened the importance of intel1ectual property (IP) in biotech business transactions. More than 70% of the total-market value of Standard and Poor’s 500 companies derive from intangible assets. The success of Life sciences companies depends not only on continuing innovation and business acumen, but also on the strength of their corporate portfolio of intellectual property rights. Any party acquiring an interest in intel1ectual property rights (whether by license, strategic alliance, or as an investor in or acquirer of life sciences entities), should conduct a due diligence analysis to ensure that the technology underlying the transaction in fact has its purported value and is properly protected. This is particularly critical because IP assets can have a significant affect on predicted cash flow, product development, and income. Any assessment of the transaction is insufficient without proper IP consideration. Often, IP is considered late in the game and in only a cursory manner, leading to significant negative results.

The purpose of a due diligence analysis involves assessment of potential risks and benefits related to the transaction, including identifying risks that may undermine the value of the technology and developing strategies for overcoming such risks. The analysis must confirm that a purported technology owner actually owns the intellectual property rights to the technology, has the right to transfer it, can use the technology without substantial risk of treading on third-party intellectual property rights, and that intellectual property rights are valid and enforceable.

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About the Author:

Leslie Gladstone Restaino is a Member of the Firm of Sills Cummis Epstein & Gross, P.C in the Intellectual Property and Corporate Practice Groups. She concentrates her practice on the special business and legal needs of public and private life sciences companies. Ms. Restaino represents established pharmaceutical companies and start-ups in the life sciences industry throughout all phases of their life cycle and understands the business concerns of growing and established companies.

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