Patent Due Diligence

While performing due diligence, merely checking real time status of patent with the relevant patent office may not be sufficient. For example, in case of USPTO (United States Patent and Trademark Office), proceedings pending before the Patent Trial and Appeal Board (PTAB) may not be available in the USPTO PAIR (Patent Application Information Retrieval) portal.

Specifically, proceedings pending before PTAB include trials, such as ,inter partes, post-grant, and covered business method patent reviews. Additional proceedings before PTAB include derivation proceedings, hearing appeals from adverse examiner decisions in patent applications and reexamination proceedings, and rendering of decisions in interferences.

In some cases, USPTO’s PAIR portal and other commercial databases can capture such information pertaining to patent proceedings before PTAB. However, it is likely that such information may not be up to date as there may exist a time lag between the status change and the time when such updates are recorded. Therefore, it is advisable to thoroughly perform patent due diligence by reviewing AIA (America Invents Act) proceedings. One way to check AIA proceedings to to enter the patent number directly into the PTAB portal.

During the due diligence, such pending proceedings can potentially affect the value of a patent, as it can provide insights as to whether or not the claims are upheld or found unpatentable.

Patent Upheld After AIA Proceedings

There can be cases wherein the patent claims are upheld after the AIA proceedings. However, that does not directly imply that the patent is strong or valuable because such AIA proceedings may highlight weak areas of patent claims, whereby the claims might have been amended, thereby significantly impacting the scope of the patents.

AIA Proceedings Not Instituted

In cases where petitions have been filed but AIA proceedings have not been instituted yet, the scope of patent claims can still be affected as simple filing of petitions imply arguments against the validity of the patents.

Patent Settlement

In case there parties to patent infringement proceedings (patent litigation) enter into patent settlement agreement even when AIA proceedings before the PTAB is still pending, important factors have to be considered while performing the patent due diligence. Such factors may include grounds of challenging validity that form part of public documents or petitions filed with the PTAB.

Patent Due Diligence – Best Practices

Patent attorneys and patent law firms while performing patent due diligence can follow best practices by focussing on following important factors:

• Validity of Patent
• Enforceability of Patent
• Strengths & Weaknesses of Patent
• Freedom to Operate
• Scope of Protection
• Potential Patent Ownership Issues
• Potential Infringement of Patent

Patent due diligence is crucial and important for technology transactions involving different areas of technology, which relies heavily on patents. In use, the process of patent due diligence comprises investigation about a patent and is generally done prior to patent acquisition. In most M&A (mergers and acquisitions) transactions, patent due diligence of a company’s intellectual property portfolio can play a critical role in the value of the deal.

Patent attorneys perform patent due diligence during technology transfer or mergers and acquisition transactions. Patent due diligence is a must for patent attorneys who handle technology transfer processes. One of the major challenges for patent attorneys who perform due diligence on prospective technology transfer candidates is identifying the exact scope of the technology transfer project.

Without a well-defined patent “checklist” or process for technology transfer, a technology transfer attorney can spend a great deal of time performing patent search queries that will yield a large number of patent candidates, but will not necessarily provide a comprehensive overview of the patent portfolio as a whole. In other words, if a patent “matching” analysis were performed, it would certainly be impossible to identify the most technically merited patent candidates, regardless of how many such technology transfer candidates there are.

Specifically, when performing patent due diligence review, patent law firms must comprehensively examine the underlying documents provided during the execution of the transaction, as well as all related documentation. While executing the transaction, the person executing the transaction should obtain a full copy of the Technology Transfer Portfolio, as well as all relevant PTO documents, in order to make sure that the invention is eligible for patentability.

Additionally, the person executing the transaction and the other party should also carefully review all related written communications regarding the technology transfer transaction and associated technology-related documents, such as business documents, patent publications, articles, published research, and white papers. If the other party’s copy of these documents is not available, the person executing the transaction should obtain a second copy from the non-disclosure repository of the PTO, and should also closely review the other party’s copy of this document.

Patent due diligence is essential for patent licensing activities. As the patent holder, you are interested in obtaining the maximum protection for your technology transfer patents. However, in addition to seeking protection under the PTO’s Article 12; your other party is also interested in securing similar protection.

Therefore, a diligent attorney in your firm should vigorously investigate all relevant facts related to the technology transfer agreement and its disclosure to the relevant licensees. The more closely the attorney looks at the contractual relationship between the parties, the closer he or she can come to determining whether a license is indeed appropriate and valuable to the licenser. If your attorney cannot adequately address these issues, it is recommended that you consider retaining the services of a patent law firm with experience engaging in patent research and analysis on an ongoing basis.

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Our team of advanced patent attorneys assists clients with patent searches, drafting patent applications, and patent (intellectual property) agreements, including licensing and non-disclosure agreements.

Advocate Rahul Dev is a Patent Attorney & International Business Lawyer practicing Technology, Intellectual Property & Corporate Laws. He is reachable at rd (at) patentbusinesslawyer (dot) com & @rdpatentlawyer on Twitter.

Quoted in and contributed to 50+ national & international publications (Bloomberg, FirstPost, SwissInfo, Outlook Money, Yahoo News, Times of India, Economic Times, Business Standard, Quartz, Global Legal Post, International Bar Association, LawAsia, BioSpectrum Asia, Digital News Asia, e27, Leaders Speak, Entrepreneur India, VCCircle, AutoTech).

Regularly invited to speak at international & national platforms (conferences, TV channels, seminars, corporate trainings, government workshops) on technology, patents, business strategy, legal developments, leadership & management.

Working closely with patent attorneys along with international law firms with significant experience with lawyers in Asia Pacific providing services to clients in US and Europe. Flagship services include international patent and trademark filings, patent services in India and global patent consulting services.

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