Building IP Strategies to Secure Investment – Expert Insight from Potter Clarkson
Potter Clarkson specialises in Life Science intellectual property, an award-winning firm with paramount experience in working with health and life science businesses, they are home to one of the largest specialist life sciences IP teams in Europe.
Since joining forces with MedCity in 2021, Potter Clarkson has bought specialist intellectual property expertise in working with investors and entrepreneurs to the MedCity Investment Hub.
This month we hear from Potter Clarkson on building IP strategies to secure investment.
Take a look at their tips for attracting additional investment and ensuring your intellectual property portfolio is ‘due diligence ready’ below:
Ensure the ownership is clear
Make sure the investors are correctly identified and that the chain of title is clear and well-documented. Ensure all necessary assignments are correctly executed, and registered where appropriate upload all documents to your central data room to save time further on in the due diligence process.
Create an IP register
Have an up-to-date IP register ready to go at all times including patents, trademarks, and designs as well as copyright and know-how. Include information in the IP register such as application numbers and status, since this is always the first piece of information that is asked for in due diligence. To be comprehensive it is also advised to upload and save all published applications and granted patents to your data room.
Map the commercial products
Creating a ‘mind-map’ with a particular commercial product at the center, showing how the different types of IP map to that product is a useful ‘cheat sheet’ during due diligence.
Prosecute the IP intelligently
It’s advised to review a particular innovation regularly (at least quarterly) and ensure that the strategy is tailored to the commercial strategy. For example, if a company is being set up for a trade sale, and it is clear that an issued patent in the US is vital to the deal going through, then take steps to accelerate prosecution in the US, for example by filing early in the US, requesting an examiner to interview or filing a track one application.
Write down an explicit IP strategy
This should be as clear and detailed as possible, an explicit IP strategy demonstrates a high level of IP awareness to a potential investor/partner. Provide detail about how future innovations are identified, for example by having regular meetings with the technical teams, the business development team, and the IP attorney, with the remit of reviewing recent R&D. You may also decide to have an incentive for employees to innovate, for example, if collaborations are involved, the IP strategy might explicitly point to an IP section of a research agreement and show that the ownership situation is clear.
Consider freedom to operate
It’s not recommended that a full freedom-to-operate search is conducted. However, it is important to show awareness of the need to consider freedom to operate, and show that you understand the distinction between obtaining your own IP portfolio and the impact of third party patents on your commercial plans. This should be written down as an explicit plan as part of the overall commercial strategy.
Always return to the business plan
As a golden rule, always revisit the business plan. The value of your intellectual property will inevitably decrease when sight of the ultimate commercial goals and/or the exit strategy is lost. It’s a good idea to begin all IP meetings with a high-level overview of the business plan and commercial goals since that is key to shaping the IP strategy.
Summary
IP due diligence is all about establishing trust and maintaining confidence. It’s a fantastic opportunity to show to any buyer or investor that the innovation underpinning the technology is sound and can be protected, that the intellectual property is being correctly managed, and that all possible commercial risks relating to the IP has been correctly identified and evaluated.
Doing this provides an enormous potential opportunity to achieve the value you want rather than allowing the buyer to leverage poor administration as an excuse to drive down the value or even walk away, and, if there are two interested parties, you may even achieve a premium!