As a biotech company, much of your value is in (pre-revenue) and/or protected by (post-revenue) your intellectual property. As you attempt to approach investors for your next round of financing, or as you consider reaching out re: potentially being acquired, it is important that your intellectual property documents are in order, and you understand your IP strengths and weaknesses and strategy.
Here's a diligence checklist annotated with some pro tips that you can use to assure that your IP records are ready for diligence from a possible investor/acquirer, and to assess your IP strengths, weaknesses, and strategy. Download the Word/PDF versions of this IP Diligence Checklist.
Pro Tip: Some version of this checklist is used by virtually all experienced IP attorneys who perform diligence for investors and/or acquirers. Proactively using this checklist to perform an internal IP audit to assure your IP records are in order before starting funding or M&A activities, will help you assure you present your IP situation and strategy in a clear and as favorable light as possible, and to avoid fire drills during outside party diligence. Furthermore, you can use the results of your IP audit to better assess the performance of your IP team, and to assess the present and potential value of your company.
Pro Tip: Consider that any information that you send/make available to another company as part of their diligence of your company, likely jeopardizes any privilege in that information, especially if there is no common interest between your company and this other company. Thus, consider what info you make available, and any words you use to describe your IP that can be interpreted as a legal conclusion/opinion. Consider documenting a common interest that your two companies may have in a Common Interest Agreement signed by both companies. Regardless, be careful about giving another company access to your company’s privileged information.
1. Patent Documentation
Patent Portfolio: A list of all issued patents, pending patent applications, and their jurisdictions (e.g., USPTO, EPO).
Pro Tip: Organize these documents according to patent families to look familiar to patent attorney(s) who are doing IP diligence on your company.
Include general bibliographic info re: patents/applications including expiration date.
Include a brief summary of value of family (e.g., “Directed to system and methods for ...”, which ideally parallels product development map).
Consider whether to include a list of exclusively licensed patent families along with the internally owned patent families.
Patent Applications: Assure copies of patent applications, especially unpublished ones, are readily available.
Patent Assignments: Documentation proving the ownership of patents and the transfer of rights (e.g., assignments from inventors to the company).
Assure that every patent/application is covered by a written assignment that is signed by all inventors.
Pro Tip: Proactively assure your assignment records are completed because this is a common area where company’s records are not clean/complete, this will almost always be flagged during diligence, and this can take some time to clean up.
Patent Prosecution History: Records related to the patent application process, including office actions, rejections, and communications with patent offices.
2. Trade Secret Documentation
Trade Secret Portfolio: Listing with identifying name and sufficient non-detailed summary description of important company trade secrets.
Trade Secret Policies: Internal policies and procedures to identify, protect, and manage trade secrets.
Pro Tip: If your company has important trade secrets, be ready to convince the possible investor/acquirer that your company understands trade secret protection, and thus treats them differently than other types of confidential info.
Audit of Trade Secret Protection: Evidence that the company has taken reasonable measures to protect trade secrets (e.g., security protocols and restricted access).
3. Trademark Documentation
Trademark Portfolio: Listing of company trademarks including mark name/graphic and country(s).
Trademark Registration Certificates: A list of registered trademarks, including logos, brand names, product names, and slogans.
Trademark Applications: Pending trademark applications, with details on jurisdictions and application status.
Trademark Assignments: Documents proving the ownership or transfer of specific individual trademark rights.
Trademark Monitoring Reports: Documentation of trademark monitoring services to track potential infringement.
Trademark Use: Assure consistent and correct use of company-owned and 3rd party trademarks on company web site(s) and product/marketing material.
4. Copyright Documentation
Copyrighted Portfolio: Listing with identifying name and brief description of important company copyrighted works, whether or not registered.
Copyright Registrations: Copies of copyright registrations for original works (e.g., software, written content, designs, and multimedia).
5. Licensing and Agreements Documentation
Licensing Agreement Portfolio: Listing of all contracts where the company has licensed its IP to third parties or where the company has obtained licenses to use third-party IP.
Likely want to list exclusive licenses separately from non-exclusive licenses
Re: non-exclusive licenses, probably important ones included only.
Collaboration and Research Agreements: Agreements with research institutions, joint ventures, or collaborators that clarify IP ownership.
Development and Software Licensing Agreements: Contracts related to the development, licensing, or sublicensing of software, including terms on ownership and IP rights.
Confidentiality Agreements (NDAs): Non-disclosure agreements with employees, contractors, partners, and third parties to protect Company’s confidential information.
License Compliance: Review license and other agreements to assure compliance with licensing obligations and restrictions.
6. IP Ownership and Assignment Documentation
Employee IP Assignment Agreements: Contracts that assign the rights of any inventions created by an employee to the company, usually attached to Employment Agreements of individual employees.
See above sections re: assignment agreements for individual IP.
Pro Tip: Assure that your company employment and consulting agreements (see below) uses present tense (“hereby assign”) language in its employment and consulting agreements’ assignment clauses.
Pro Tip: Ideally, all employees have the same invention assignment agreement with their employment agreement; Especially be careful to review employment/consulting agreements of key founders and key R&D members/inventors.
Contractor/Consultant IP Assignment Agreements: Agreements ensuring that any IP created by contractors or consultants during their engagement belongs to the company.
Work-for-Hire Agreements: Contracts specifying that works created by employees or contractors are owned by the company, usually as part of, or in IP agreements attached to employment and/or consultant agreements.
Joint Venture and Partnership Agreements: Contracts that define the ownership and sharing of IP resulting from joint ventures or partnerships.
7. IP Maintenance and Fees
Patent Maintenance Records: Proof of payment for maintaining patents, including any fees due for renewal.
Trademark Renewals: Evidence that trademark registrations are up to date, including any renewal applications or fees.
Copyright Renewals: Documentation regarding any maintenance or renewal requirements for copyrighted works.
License Fees and Royalties: Payment records related to any IP license or royalty agreements.
8. IP Litigation and Dispute Records
Litigation History: Documentation of any past or ongoing litigation related to IP, including patent, trade secret, trademark, and copyright infringement cases.
Cease-and-Desist Letters: Any cease-and-desist, or other threat letters sent or received regarding alleged IP infringement.
Settlements or Judgments: Documentation of any settlements or court judgments regarding IP disputes.
9. Legal Opinions/Searches
IP Legal Opinions: Opinions from legal counsel regarding the validity and enforceability of a) the company’s IP or IP of competitors, such as patentability opinions, and b) outside party patents vis a vis Company product(s)/service(s), such as freedom-to-operate opinions.
Pro Tip: Be careful sharing legal opinions with outside parties, which can jeopardize the privileged nature of these documents. Consider getting a Common Interest Agreement in place with the company performing the diligence to help protect privilege of your opinions before sharing them.
IP Search Results: Results/reports from IP searches (e.g., trademark clearance searches; patentability searches; freedom-to-operate searches) performed by or for your company.
Conclusion:
A thorough IP due diligence checklist is vital for assessing the strength, value, and potential risks associated with a company’s intellectual property. A version of this checklist will be used by virtually every patent firm that is doing IP diligence of your company during fundraising and M&A activities.
Pro Tip: It is helpful to perform internal due diligence on your company’s IP yourself or by retaining an outside patent law firm, before contacting potential investors or acquirers, or to check on the performance of your company’s IP team.
About DHL
Double Helix Law (DHL) has decades of experience building strong patent portfolios for life science companies. Learn more about DHL and meet the team.
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2/21/25 Published (EJV)
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