Thinking of launching an IPO? IP issues to consider

Introduction
Audit
Restructuring
Consent
Risk management
Early action

Introduction

Quite often, companies undervalue or under-recognise the breadth of their IP assets. It is usually not until a proper consideration of companies' intellectual property – frequently through undertaking an IP audit after prompting from a commercial or financial advisor – that they realise the extent of the IP assets they hold.

It is essential that companies get a clear picture of the extent of their IP portfolio prior to launching an initial public offering (IPO) so as to maximise their value in the eyes of potential shareholders: an extensive range of IP assets can evidence a company's competitive advantage and long-term profitability. This article outlines the IP issues that companies should consider prior to launching an IPO.

Audit

The first step that a company should take is to carry out an IP audit, covering all of its IP assets. These can take the form of:

• domain names;
• trademarks;
• patents and designs;
• social media handles;
• trade secrets; and
• other confidential information (eg, blueprints, drawings, marketing materials and branding guidelines).

An IP audit will give companies an idea of where and how their IP assets are held. It will also enable companies to identify any potential infringers and infringement risks.

Restructuring

An IP audit may reveal issues such as domain names being held in the names of ex-employees or infringers in other countries using their trademarks. Therefore, IP audits often lead to system changes and IP restructuring. Companies may wish to consider, for example:

• setting up an IP holding entity;
• entering into intra-company licence agreements or IP management agreements; or
• the purchase or sale of specific critical intellectual property.

Consent

Many commercial contracts contain clauses that require the consent of licensors regarding IP restructuring. Some contracts even have specific clauses on the steps a licensee may need to take prior to launching an IPO. Companies should carefully review all commercial contracts concerning their intellectual property and ensure that they have obtained the necessary permissions prior to proceeding.

Risk management

Companies should consider putting in place IP risk management steps to avoid the risk of infringement. Services such as trademark watch services or online systems that check patent publications databases for infringement risks, for example, may be of value.

Early action

Companies should act early – due diligence can take time, and often results in the need for further action, such as IP portfolio restructuring, new government filings and new commercial documents. Sometimes, assignments or "confirmations of assignments" are needed and generally a "clean up" needs to occur in order for statements on intellectual property in any prospectus to be correct. Acting early means that companies have sufficient time to comprehensively evaluate their IP offering and ensure that it is in the best possible state to present to potential shareholders.

For further information on this topic please contact Melissa Murray at Bird & Bird by telephone (+971 26108 100) or email ([email protected]). The Bird & Bird website can be accessed at www.twobirds.com.