Patent Licensing And Corporate Transactions: Analyzing The Role Of Intellectual Property In Mergers And Acquisitions

Shreya Jagadish, School of Law, CHRIST (Deemed to be University), Bangalore.

Taru Rohatgi, School of Law, CHRIST (Deemed to be University), Bangalore.

ABSTRACT

Intellectual Property (IP) and Mergers and Acquisitions(M&A) both play an important role in today's dynamic business environment. They have become a common strategy for firms to grow, reconstruct, and maximize profits. IP plays a crucial role in M&A transactions, as it can significantly impact the value of the deal, the acquirer's interests, and the integration of acquired IP assets. This paper's main aim is to analyse IP's role in M&A transactions, with a specific focus on Patent licensing and Corporate transactions. It begins by providing an overview of the existing literature on the confluence of IP and M&A, highlighting the importance of due diligence practices, integration techniques, and legal factors. The paper delves into the legal framework governing IP in India, analyzing the provisions of the acts and their implications for IP in M&A transactions. The analysis recognises that the legal system in India is complex and necessitates careful consideration of a number of elements, including the type of intellectual property asset, the ownership structure, and the licencing agreements. Moreover, it highlights the importance of rational allocation of IP rights in M&A transactions, particularly in spin-outs and joint ventures. Furthermore, it presents a detailed analysis of patent licensing in M&A transactions. The analysis reveals that patent licensing can be a valuable strategy for companies to acquire new technology, expand their product portfolio, and enter new markets. However, patent licensing also involves significant risks, such as the risk of infringement, invalidity, and licensing fees. The paper examines the different considerations that companies should consider when engaging in patent licencing, such as licence scope, licence period, and royalty rates. Finally, by emphasizing the importance of conducting proper due diligence on IP assets before acquiring or merging with the IP owner, the paper suggests that companies should adopt a strategic approach to IP.

Keywords: Intellectual Property Rights, Mergers, Acquisitions, Due Diligence, Patent Licensing.