IP Due Diligence Analysis for Founders and Investors
When growing or investing in a company, it is not uncommon for founders and investors to only focus on market fit and the potential size of the market to be captured while failing to think about the opportunities surrounding a company’s intellectual property (IP) holdings.
Does a company have a patentable innovation? Do they already hold a Patent? If so, what is the strength of the Patent Claims? Is the Patent Specification broad enough to help capture a new market segment or hold up to scrutiny in the marketplace to ward off infringement? Is there an opportunity to grow a Patent Portfolio and become a leader in your space?
Strength of Claims (Offensive) – What you assert in a court of law to stop others from infringing.
Breadth of Disclosure (Defensive) – Novel and Non-Obvious elements as well as areas in support of these that are described in the Patent Specification, which bar others from separately claiming them.
The protection, valuation, and monetization of Patent assets are important considerations for both founders and investors.
Enhancing Corporate Value Through Intellectual Property (IP)
For early stage companies, IP assets can help to de-risk investment for funding organizations and may positively impact how easily and how much money can be raised.
As a company begins to scale, building a strong Patent Portfolio can be an important contributor to stronger valuation prior to additional rounds of funding, creating long-lasting enterprise value.
In addition, IP assets can be monetized (licensed or sold) and typically, serve as a shield against competitors eroding market share for the protected invention.
Competitor IP Landscape Analysis
This Analysis involves matching the Patent Claim scope of your issued Patents and Patent Applications against all Claims in issued Patents and Patent Applications filed by others in the same channel of commerce, especially direct competitors.
So, why would a founder commission such an Analysis?? This is a powerful tool to not only learn how strong your IP assets are vis-a-vie your competitors, but also highlight potential areas of innovation opportunity in the market for further exploitation.
Patent Portfolio Analysis
Simply having one or more Patents may not equate to a strong portfolio. A Patent Portfolio Analysis includes a Claim Analysis to evaluate the strength of the Claims for each issued Patent and a Specification Review to determine scope of coverage.
Why is this important?
A strong Patent Portfolio enhances corporate value through the strength of the Patent Claims and a broad Specification that combined, fence off the scope of protection in the marketplace.
Thus, prior to investing, it is prudent for investors to commission such an Analysis in order to determine the strength of a company?s competitive innovation edge in the marketplace in order to guide future commercialization opportunity.
The stronger the Patents of your portfolio companies, the more valuable your investments become.