IPR issues in M&A transactions

Mergers and Acquisitions have become one of the key strategies for rapid and exponential growth in the corporate sector. When two or more companies merge, all the tangible, as well as intangible assets of one company, are transferred to the acquiring company. Intellectual property assets along with their respective rights are transferred. M&A activity is actively being driven by the IP sector.

For example, Roche, the world’s largest biotech company spent nearly USD 2 billion in order to acquire a technology called ECL which was necessary for Roche’s immunoassay diagnostic business. In 1992, Roche obtained the license to use ECL from IGEN. IGEN however, claimed that Roche was using the technology beyond the authorized use and Roche’s license to use ECL was cancelled. In turn, Roche acquired IGEN for nearly USD 1.2 Billion in a complex acquisition structure. It further acquired Bioveris, the owner of ECL technology for USD 600 Million.

?Valuation of IP

Valuation of IP assets involves determining the monetary value of such assets. The valuation of the IP is one of the most crucial steps in M&A deals and it involves three stages; Pre-acquisition, the deal and incorporation. It is necessary to ensure that the IP rights of the company are not unvalued. Research has time and again shown that IP assets are not appreciated for their original value.

Determining the integrity of the target company is the first step in evaluating the IP. Once that is done, the final price of the purchase can be negotiated between the acquiring and the target company. When valuing an IP asset, it is necessary to consider the undercurrents of both the parties’ businesses, the reason behind the merger of acquisition and the net profit or loss that would occur from the collaboration. Other factors such as standard of value, the purpose of valuation, the method of valuation and the nature and strength of the IP asset should also be taken under consideration. Valuation of IP assets is important as it provides crucial information regarding the economic sustainability of the merger or acquisition and therefore allows the companies to determine the potential uses of the IP. The valuation of an IP asset assists in speculating the profits that can be earned if and when the asset is acquired. It helps facilitate other crucial processes such as licensing and franchising the asset, financial reporting, developing taxation policies and strategies and also helps determine if investments should be made in research and development.

The value of an IP can sometimes even exceed the value of the business from which it came from. For example, InterTrust had its business in digital rights management (DRM) and was listed on the NASDAQ. After the business failed in its early days, it was put for sale as a pure IP concern, with no assets or clients. The company only had its patents. InterTrust was the bought by Fidelio, a joint venture by Sony, Phillips and many more for USD 453 Million.

Due Diligence

The valuation of an IP asset can be extremely unpredictable as it is heavily dependent upon the current value of the foreseeable financial profit or loss. Therefore, in order to produce an accurate valuation of IP assets, it is crucial to undertake due diligence.

When it comes to IP assets, due diligence is an indispensable step due to the fact that there exists a glaring information gap between both parties. Transfer of IP assets starts with the creation of a Memorandum of Understanding (MoU) between the parties who are willing to exchange information. Moreover, if the IP asset contains trade secrets or sensitive client information, confidentiality agreements need to be signed. The methods of valuation of an IP asset involves; marked- based method, cost-based method and income method.

Once the due diligence report created by both parties is agreed upon, the final cost of the asset can be determined. Following this, the merger and acquisition agreement can be executed which officiates the transfer of the asset in the eye of the law.

Failure to carry out proper due diligence can lead to shortfalls in the business. This was observed when Volkswagen AG Corporation purchased the assets of Rolls-Royce but failed to purchase the famous Rolls-Royce trademark free and clear of any other interests in the mark. These interests should have been discovered during the due diligence process being carried out by Volkswagen AG Corporation. Due to the failure on their part the trademark was eventually transferred to BMW.

?General checks when undertaking due diligence:

·??????Timespan: Often during mergers and acquisitions, due diligence is carried out either too late in the entire process of acquiring a company or it is carried out in an ineffective manner. It is crucial that due diligence be carried out early in the early stages of the process. Strategic and effective due diligence would allow the companies to take the right decision.

·???????Identification of IP assets: First and foremost, the intangible assets which have to be sold or transferred have to be identified. The IP portfolio consists of various intangible assets. It is also necessary to understand the target company and its business. What part of the business is to be acquired also needs to be identified. Identifying and spotting the IP assets the company targets to acquire and proper categorization of the rights would make risk assessment more effective.

·??????Verification of ownership of IP: An extremely crucial step of the process of due diligence is to determine the true owner of the IP asset. This step also involves determining of the ownership of the said asset is disputed or not. The true owner of the IP asset can be traced by looking into the registration or ownership documents. This is extremely necessary to ensure a smooth transfer of IP assets in mergers and acquisitions.

·??????Freedom to Operate: Another important aspect while carrying out due diligence is to understand and determine the scope of the acquired IP asset and to understand if such asset would fulfil the requirements of the acquiring company (if the products and services that the company requires are within the scope of the IP asset). Freedom to operate has a direct effect on the business activities of the acquiring company.

·??????Evaluate possible IP infringements and third-party claims: Claims of third parties should also be looked into while determining the true owners of the IP asset. Another extremely step in the process of due diligence is to check if any third party is infringing upon the IP asset right or if there is any possibility of infringing upon a third party’s IP rights. Certain complications can turn up in cases of existing licensing agreements. The IP asset in question might be within the authority of a third party. The acquirer of the IP asset would also be responsible for carrying out such past agreements and it might limit the scope of the IP asset for the acquiring company. Therefore, it is necessary to determine if any third-party consent is required before such IP asset is transferred to the acquiring company.

·???????Terms and territory check: Certain IP assets may have certain strict terms and conditions attached to them. Moreover, there might exist certain restrictions in the certain region while using the IP asset. Therefore, it is necessary to conduct thorough research regarding the terms as well as their IP rights in certain territories.

?Three of the most common methods of valuation IP assets are:

???????i)?????????Income method: The income method is the most commonly used method of valuation of an asset. The asset is valued on the basis of the income that the IP is expected to generate, adjusted to the present-day value of the asset. The method is easier to use for IP assets with positive cash flow and for those assets whose cash flows can be estimated with certain reliability.

????ii)?????????Market-based method: The asset is valued by comparing it with the price of a similar asset in the market under comparable circumstances. This method is advantageous as it is simple to use and is based on market information that is readily available.

??iii)?????????Cost method: the cost method determines the value of an IP asset by determining the cost of a similar IP asset in the market. The cost method is beneficial when the IP asset can be accurately reproduced and when the economic benefits of the asset are difficult to be quantified.

?There are certain prerequisites that an IP asset has to meet before it can be valued:

1.?????The asset should be identified separately i.e., it should have specific identification and a recognizable description

2.?????There should exist tangible evidence supporting the existence of the asset such as a contract or a license, or registration documents

3.?????The IP asset rights should be capable of being sold independently of other assets of the business

4.?????The asset should have been created at a specific point in time

5.?????The IP asset and rights should be capable of being transferred and should be enforceable

6.?????The income generated from the IP should be capable of being separated from other streams of income

7.?????The IP asset should be capable of being destructed or terminated at a specific point in time.

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Key Issues (Intellectual Property Mergers and Acquisitions)

1.?????Intellectual Property Documentation (IP Documentation)

The seller must have produced a comprehensive list of any intellectual property (and associated paperwork) that is significant to the seller's business in preparation for the acquirer's examination, which should include the following items:

??????i)?????????Patents and patent applications are two types of intellectual property (including patent numbers, jurisdictions covered, filing, registration and issue dates)

?????ii)?????????Agreements with employees and consultants regarding confidentiality and invention assignment

???iii)?????????Trademarks and service marks

???iv)?????????Trade secrets and proprietary know-how that are critical.

?????v)?????????Technology licenses obtained by the selling business from third parties.

???vi)?????????Technology licensing from the selling business to third-party organizations.

??vii)?????????Computer software and databases

?viii)?????????Contracts that provide for indemnity of third parties in the event of intellectual property infringement.

???ix)?????????Products and services provided by the vendor that include open-source software (or that are created using open-source software)

?????x)?????????Claims for intellectual property infringement, including any IP lawsuit or arbitration.

???xi)?????????Domain names are a kind of name that is used to identify a website.

??xii)?????????Liens or encumbrances on the intellectual property

?xiii)?????????Source code or object code escrows are used to protect intellectual property.

?xiv)?????????Accounts on social networking sites (Twitter, Facebook, LinkedIn, etc.)

A number of these things will almost always need to be mentioned in the disclosure schedule that is included with the purchase agreement (see Item 13 below, "Key Disclosure Schedule Issues Concerning Intellectual Property" for more information). For the purpose of facilitating the due diligence process of an acquisition, the seller will often have all of these papers (with the exception of trade secrets) stored in a virtual data room. Assembly of these papers and the establishment and maintenance of the data room are time-consuming tasks for the seller to perform, and it is essential that the business completes these tasks as early in the selling process as feasible.

?·????????Development and acquisition of intellectual property

In the case of a technological company, an acquirer would want to ensure that the value it puts on the selling company is backed by the extent to which that company owns (or has the right to use) all of the intellectual property that is essential to its present and future operations. For private businesses, especially those that did not have intellectual property counsel engaged in the company's formation, it is not unusual to discover that there are questions as to who owns (or has the right to use) the company's essential intellectual property (IP). Individuals that were engaged in the development of such intellectual property may no longer be employed by the business, which may aggravate the situation (or worse, now work for a competitor). The acquirer will also want to know if the seller will be able to continue to utilize such rights once the purchase is completed and closed.

If the seller's intellectual property was created in collaboration with another party or with the assistance of other external sources such as the government, through universities, or by using military resources, such situation may also limit the transfer of the IP, mandating sharing or ownership of the IP with third parties, or necessitate the payment of a fee in connection with the acquisition.

Employees and independent contractors of the seller, especially those who are a part of the creation process of the seller's intellectual property (IP), are generally required to sign (at the start of their employment with or relationship with the company) an agreement essentially giving the rights to the company of any intellectual property developed by them in the course of their employment and is related to the company business. This usually involves the waiver of any moral rights that may exist.?The following items are usually included in the due diligence process connected with Confidentiality and Invention Assignment Agreements:

·???????Is the agreement's form sufficient to transfer any intellectual property rights created by the employee or independent contractor that should rightfully be held by the seller? ? Is the agreement's language clear and unambiguous?

·???????Have all of the workers and contractors who were engaged in the creation of the seller's intellectual property signed a similar agreement?

·???????Have any intellectual property rights that are essential to the company's operations been excluded from the agreement's impact (via the use of a schedule of exceptions) by the employees or contractors?

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·???????Concerns Regarding Open-Source Software

Many software engineers and developers make use of open-source software or integrate it into their work while creating new products or technological innovations. When such open-source software is used or integrated into a selling company's operations, an acquirer may encounter ownership, licensing, and compliance problems that must be addressed.

Among the issues to consider is that certain open-source licenses require any user who modifies and distributes open-source software to make its source code publicly available for use by other users, as well as ensuring that licenses are granted of its software to third parties under the same terms as the license that was used to distribute the software. Open-source problems may be a deal-breaker for an acquirer that is reliant on the ability to solely utilize the seller's technology to close the transaction.

As part of the acquisition agreement, the seller must provide representations and warranties to ensure that no open-source or similar software has been assimilated into any of its software or products in a way that would put an obligation on the seller to disclose to any persons the source code of proprietary software or intellectual property contained in its products, and that no open-source licensing agreements have been violated.

Of course, the seller will make every effort to restrict the scope of any such statements via the use of knowledge and materiality qualifiers.

As a preventive measure, a seller contemplating an acquisition may want to use software tools such as Black Duck or Palamida to determine whether or not the company has an open-source problem before proceeding with the transaction. These systems are capable of scanning large amounts of code and cross-checking the results against databases of open-source code, allowing for a rapid evaluation of possible issues to arise.

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·???????Representations and Warranties Relating to Intellectual Property Ownership

The intellectual property representations and warranties in a private business purchase, are usually used to accomplish two goals: first, to protect the interests of the parties involved in the acquisition. First and foremost, if the appropriator discovers that the intellectual property representations and warranties were false when made, to a degree of materiality as agreed to in the acquisition agreement, the acquirer may be relieved of its obligation to complete the transaction (and may be entitled to terminate the agreement). First and foremost, in the event that the seller's intellectual property representations and warranties are false at any of these periods, the acquirer will have the right to be reimbursed for any losses incurred as a result of the seller's misrepresentation after the closure. This is something the seller will want to keep limited to a minuscule percentage of the purchase price (kept in escrow by a third party), and the acquirer has the right to recover up to the whole purchase price if the IP representations and warranties prove out to be false in the future.

The seller's representations and warranties about their ownership of intellectual property are among the most important intellectual property representations and warranties. The acquirer wants to guarantee that the seller is the only and exclusive owner of each item of intellectual property (IP) owned by the seller, and that such IP is not subject to any encumbrances or limitations that would restrict the seller's ability to use the IP asset, or that third parties have rights to such IP that are inappropriate or materially detract from its value, and that such IP is not subject to any encumbrances or limitations that give third parties rights to such IP that are inappropriate The acquirer will also want to know if the seller has the legal right to utilize any intellectual property (IP) held by other parties that are important to the seller's company, whether via a license (exclusive or otherwise) or other contractual agreement with the third party.

It will be important for the seller to make certain that it is not obligated to make any representations and warranties regarding its ownership of intellectual property that pertain to a period after the closing, when there may be factors beyond its control (such as prior agreements entered into by the acquirer) that limit the ability of either the seller or the acquirer to fully exploit the IP.

As examples of issues that may encumber or restrict the seller's capacity to utilize its owned intellectual property after the completion of a purchase, consider the following items:

Patents may be declared invalid by third parties for a variety of reasons, including the presence of "prior art" or any other reason.

a.?????Liens on intellectual property in favor of banks or other lending institutions

b.?????Claims by third parties that the intellectual property infringes on their patents or other intellectual property rights

c.?????Inadequate proof that the employees or contractors who contributed to the development of the intellectual property transferred their rights in the intellectual property to the seller (see Item 2: "Development and Acquisition of the Intellectual Property" above).

d.?????First refusal rights, exclusive rights, or similar rights in favor of third parties regarding intellectual property (IP)

e.?????Failure to acquire any third-party consents that would have been required for the transfer of intellectual property rights to the seller (if not originally developed by the company)

f.??????Granting broad licenses to intellectual property in favor of third parties that compete with or may compete with the seller

g.?????Open-source software problems (see Item 3: "Open-Source Software Issues" above for further information).

h.?????The failure of the vendor to have properly registered the intellectual property with the relevant governmental authority.

?·????????Representations and Warranties Concerning Intellectual Property Infringement

The acquirer usually requires the selling business to represent and guarantee that the following things are true:

a.?????The operation of the selling company's business does not infringe, misappropriate, or breach the intellectual property rights of any third parties.

b.?????No other party is infringing, misappropriating, or otherwise breaching the intellectual property rights of the selling business.

c.?????There is no ongoing or threatened lawsuit, and there are no claims pertaining to any of the above that have been filed.

The extent and limits of these representations and warranties are often the subjects of intense negotiation between the parties. In addition, the acquirer is worried about the possibility of significant, unanticipated infringement claims being brought against it by other parties after the signing or completion of the transaction.

However, the seller often tries to restrict the extent of the non-infringement claims and warranties by doing so in the following ways:

o??Qualifiers of importance in terms of materiality

o??Qualifications based on knowledge

o??Representations are restricted to infringement of patents that have already been granted (and not all other IP rights)

o??Getting rid of any confusing claims (such as the claim that no third party is "diluting" the seller's intellectual property).

?·????????The Most Important Issues Concerning IP-Related Agreements

The following are some of the most important problems that may emerge in the context of the purchase of a privately owned business that is connected with the selling company's intellectual property-related agreements:

o??The acquirer will want to carefully examine the terms of the IP-related agreements needing permission to an "assignment" before closing the transaction.

When acquiring a privately owned business, another problem that often emerges is the existence of provisions in the seller's intellectual property-related agreements that are overbroad in certain respects that are relevant to the purchase. Several intellectual property-related agreements, for example, include restrictive provisions that claim to bind all "affiliates" of the seller. Consequently, even if the acquirer is not a party to the IP-related agreement, the issue arises as to whether the acquirer and its other subsidiaries will be liable to such restrictions with regard to their respective companies once the acquisition has been completed.

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o??The final acquisition agreement for the acquisition of a private company will require the seller to abide by the obligations under all intellectual property-related agreements to which it is a party or by which it is bound during the period between the signing of the agreement and the closing of the acquisition. The seller would also be required to take certain prudent steps such as to take (or refrain from taking) certain actions under such agreements during that period. Management of the seller, in consultation with intellectual property counsel, will need to evaluate the degree to which the firm can comply with these covenants without causing damage to the company and its operations. According to the best of their abilities, acquisition agreements should include language specifying that if the seller believes that it must deviate from any of these covenants, the acquirer's approval to the deviation should not be unreasonably withheld, delayed, or conditional. Pre-closing problems are more likely to arise over a long pre-closing time than during a relatively short pre-closing period.

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·????????Intellectual Property-Related Disputes

An acquirer will conduct a thorough investigation into the seller's participation in any current or previous intellectual property lawsuits or other issues. This examination may include determining whether or not the seller is exposed to intellectual property issues and how aggressively it has attempted to defend its rights. Unresolved third-party claims that have not yet resulted in litigation and the conditions of previous settlements of claims, disputes, and litigation are all of the special importance (including releases and covenants not to sue). Because of ongoing IP litigation and unresolved claims, the acquirer may want to insist on a particular indemnity to shield the acquirer from the possibility of a significant verdict.

In addition, the seller must consider the implications of a significant intellectual property-related claim emerging between the signing of an acquisition agreement and the completion of the transaction. As far as the acquirer's preferred negotiating position is concerned, the acquirer believes that if such a claim is asserted, the acquirer should not be required to complete the purchase. According to the seller, a closing condition of this kind is difficult to accept since the selling business and its shareholders would want a high degree of confidence in the closure. These concerns can be particularly acute in situations where an acquisition will be publicly announced prior to closing, because third parties may be motivated to file claims during this period, believing that the pending acquisition increases their leverage in the event of a quick settlement of their claims. Therefore, as an alternative to such a closing condition, the seller will be required to provide post-close indemnification to the buyer. It goes without saying that such an indemnity cannot be provided without conditions: usually, the seller would demand a limit on its liability, as well as the right to fight such a claim once the sale has been completed.

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·????????Websites and social media platforms

The seller's websites and social media presence may be critical components of its overall business strategy. In this respect, a purchaser may be concerned about the following issues:

1.?????If the seller's key domain names are listed as registered owners with the appropriate domain name registrar, does this indicate that the seller is the registered owner of all of the seller's key domain names?

2.??????Is the seller's Terms of Use Agreement and Privacy Policy adequate in protecting the company's intellectual property rights?

3.?????Does the vendor adhere to the terms of its Privacy Policy as stated on its website?

4.?????How can I find out the social media accounts for the company? What name do they have on the registration documents: the name of the business or that of an employee or consultant?

5.?????The material that is uploaded on a business's website or social media accounts is owned by the firm. Is the business allowed to utilize any material it deems acceptable in its marketing efforts?

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9. Issues Concerning Data Protection and Privacy

It will be necessary for the acquirer to verify that the seller has adopted and is continuing to maintain suitable policies, procedures, and security measures in relation to data protection and privacy concerns. Due diligence in this area may involve the following:

a.?????An examination of any cyber-attacks or breaches into the seller's computer system.

b.?????The seller's practice of collecting personal information from users, as well as the seller's compliance with its Privacy Policies

c.?????Reviews of third-party contracts to verify that the parties are properly bound by confidentiality requirements.

d.?????Examining any allegations or complaints regarding privacy or data breaches, including

e.?????Examination of the seller's information technology business continuity plan

f.??????Examine the seller's security policies and procedures for recruiting employees, including if background checks, drug testing, credit checks, or other screening procedures are used.

g.?????Verification of whether the seller has internal policies and processes in place to respond to a request for information about a security breach

h.?????Specific representations and guarantees related to the seller's compliance with data protection and privacy regulations may also be included in the purchase agreement, at the discretion of the acquirer.

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10. The Extent to Which the Seller Is Liable for Intellectual Property Issues

When acquiring intellectual property, an acquirer will demand that the seller or its stockholders indemnify the acquirer for any breaches of IP-related representations, all known claims (including pending litigation), and, in many cases, any future claims related to the seller's intellectual property. When it comes to mergers and acquisitions, negotiating the terms, circumstances, and limits of indemnification clauses is one of the most essential discussions, particularly when the seller's true worth is in its intellectual property.

Of course, throughout the process of an acquisition, the acquirer wants to be indemnified for a wide variety of issues in addition to intellectual property issues. The seller and its legal advisors must develop priorities and a negotiating strategy in order to effectively optimize a negotiation of IP-related indemnification terms, with the goal of achieving an acceptable outcome in terms of IP indemnification terms through tradeoffs made during the negotiation. Taking use of the power that a seller has while negotiating a term sheet or letter of intent to handle intellectual property and other indemnity issues is particularly essential for sellers. See Negotiating an Acquisition Letter of Intent for further information.

The following are the most significant indemnity points:

????(i)?????????It is preferable for the selling business to restrict indemnity to breaches of intellectual property representations and have the indemnification obligation terminate when the survival period for general representations expires.

??(ii)??????????Scope and Survival of Indemnification: Most of the time, the acquirer will ask for a longer survival term for intellectual property rights.

?(iii)?????????The seller (or the selling shareholders) should seek a limit on the amount of indemnification that they (or their stockholders) are obligated to pay. In an ideal world, the cap would be the same as that for breaches of general representations, although it is common for the acquirer to request that IP indemnification claims be subject to a higher cap than that for general representations claims.

11. Matters that are not covered by the cap

In certain cases, the purchaser may demand that a limitation not be imposed on a range of indemnifiable issues, such as claims for fraud, deliberate violation of statements, or breach of covenants. In nearly all cases, sellers are opposed to these exclusions because they believe that if the selling shareholders do not consent to a sale of their business, the selling stockholders' exposure will always be restricted to the amount of their investment and nothing more. From the standpoint of the seller and its shareholders, the "cap" must always be the purchase price; otherwise, why would the selling stockholders accept the risk of having to repay to the acquirer a sum greater than the amount of the original purchase price?

Limits and Deductibles:

1.????Thresholds and Deductibles: The acquirer will almost always agree that it will have no recourse against the seller or selling shareholders until and until its claims total more than a certain threshold sum (in total) (e.g., 1.0 per cent of the purchase price). A "tipping basket" (amount that, once exceeded, entitles the acquirer to be indemnified for all damages up to and including the first dollar) and a "true deductible" (amount that, once exceeded, entitles the acquirer to be indemnified for all damages up to and including the first dollar) are two different types of deductibles (the indemnity is limited to amounts over the threshold).

2.????Management of the Claims Defense Process: Although acquirers are often insistent that they should be in charge of the defense of any third-party intellectual property claim, disagreement, or litigation, the seller should not be afraid to challenge this stance in the courts. Due to the fact that the acquirer is effectively spending the selling stockholders' money, it is possible that the acquirer will be less motivated than the selling stockholders to conduct the defense as efficiently as possible, and that the acquirer will be motivated to settle claims for amounts in excess of their true value out of the escrowed funds.

?12. Disclaimers made by the seller

Fraud is one of the most important allegations that a dissatisfied acquirer may bring against a seller, and it is one of the most difficult claims to prove. An acquirer may file a complaint alleging that information given to it during due diligence meetings with management or papers made accessible in a data room was inaccurate or deceptive. In the unfortunate event that buyer's remorse comes in, an acquirer's lawyer will have an easier time filing a case that contains an accusation of fraud, no matter how clean a seller's company may have been or how meritless the claim really is.

Realizing that post-closing lawsuits are sometimes filed by dissatisfied purchasers (as opposed to purchasers who have been injured by seller wrongdoing), sellers would be well advised to take the following measures, which have been approved by the courts:

·????????First, make certain that the acquisition agreement contains an express disclaimer made by the seller and acknowledged by the acquirer, stating that the seller is only making the representations and warranties set forth in the acquisition agreement.

·???????Second, make certain that the acquisition agreement contains a written agreement between the seller and the acquirer. Furthermore, the seller should disclaim any representations or guarantees about any predictions, forecasts, or potential future operational outcomes that may be made by the buyer.

As an additional precaution, the acquirer should expressly state in the acquisition agreement in which it is entering that it has conducted its own investigation into the seller's business and that it is not relying on any representation or warranty made by the seller (or any of its officers, employees, or advisors) other than those expressly set forth in the purchase agreement.

?13. Issues Relating to Control Assignment and Transfer

Most intellectual property licenses and other IP-related agreements include clauses requiring the permission of the other party in the event of a change in control of the selling business or a sale or assignment of the agreement by the selling company. According to the form of the purchase transaction, the degree to which such permission is needed is often determined. The approval of a third party is almost always required for an asset sale arrangement. In contrast, determining whether or not third-party permission is needed for a sale of stock in the selling business or a merger involving the selling company would necessitate a thorough examination of the contract wording as well as relevant case law in this area.

The failure to acquire the necessary permission may result in the selling business breaching the IP license or other IP-related agreement if the consent is not obtained. Therefore, an acquirer will need the selling firm to state in the acquisition agreement if any such consents are required for the deal to be completed successfully. Furthermore, an acquirer will seek to have the closing of the transaction conditional on the receipt of the most important consents, and it may also seek indemnification if failure to obtain a materially required consent results in the loss of an IP license or related intellectual property agreement.

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This is 21st article in the series on #mergersandacquisitions by our student researchers Swasti Patoria, Annapurna Prabhu, Astha Agarwal, Aayomi Sharma, Amrutha Alapati and Aradhya Singh, students of Jindal Global Law School (JGLS) Symbiosis Law School, Pune and Symbiosis Law School, NOIDA

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