Key Questions for Patent Due Diligence

A technology purchaser, licensee or investor can obtain much less than expected if it fails to ask the right questions about patents. Essential questions to ask before entering into an IP transaction include:

Who is the owner?

A patent publication only identifies the owner at the time of first issue. Often, this is not the current owner. When a patent is assigned, the assignment is recorded with the U.S. Patent and Trademark Office.  Security interests, name changes, and other documents affecting title also may be recorded.  The buyer should obtain a complete chain of title from the original owner (which are the inventors, in the case of a patent).  The buyer also should check government records to ensure that the assignments were properly recorded.

Are the IP rights still in effect?

Most US utility patents have a term of 20 years from the effective filing date, so long as the patent owner pays maintenance fees at various time intervals.  If the owner failed to pay the fees, the IP rights may have lapsed.

Does the patent cover the relevant technology?

A patent includes a set of claims that define the patent’s coverage.  To infringe the patent, the infringer must practice all elements of at least one claim.  The patent also will include a background, detailed description and drawings.  The patent scope may not extend to this additional information.  When acquiring or licensing a patent, the buyer should review the claims to ensure that the patent covers the desired technology.

Will I infringe another patent by using this technology?

A patent grants a right to exclude others from making, using and selling an invention. However, a patent does not ensure a right to practice the invention, as the invention also may be covered by other patents.  The buyer may require the seller to warrant that it knows of no other necessary patents.  The buyer should also independently investigate whether other patent rights are required.

Are there relevant pending patent applications, and are they likely to result in patents?

A patent may not issue until several years after the filing date of an application, and patent rights have no effect unless and until a patent issues. When acquiring or licensing technology, the buyer should ask about pending patent applications and investigate the likelihood that the patent will issue.

Was the invention disclosed before a patent application was filed? In the U.S., a patent application must be filed within one year of the first offer for sale or public disclosure of an invention. If a patent application was not filed in that time period, the inventor waived patent rights. Most foreign countries are more stringent and require that an application be filed before any sale or public disclosure

(Adapted from an article originally published in TEQ Magazine.)

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