Worldwide: IP Due Diligence – Put Simply (With The 6 T’s)

Last Updated: 15 November 2006
Article by Duncan Bucknell

Take home

In my earlier article ‘Analysing IP – put simply’, I introduced the ‘6T’ framework for analysing IP issues. This article uses the same framework to show you how to simply structure an IP due diligence.

Just to remind you, here are the 6 T’s:

1 ­- Type of IP

2 - Time (until expiry)

3 - Territories (in which IP is held/registered)

4 - Terminated (ie the status of the IP)

5 - Technical Scope of the monopoly

6 - True monopoly? (validity)

Send an email here to receive copies of future Global IP Strategy Updates directly into your inbox.

My two most recent articles were:


IP Due diligence may be done for a wide variety of reasons. For the sake of this article, let’s assume that it is part of an analysis of a potential M&A acquisition or in-licensing deal.

As I said in my earlier article, this is a simple tool and there are many, jurisdiction-specific complexities. It is meant to trigger a useful line of questions and is not the ‘last word’ in any jurisdiction on the applicable law.

Preliminary point

Once you understand the value-drivers for the deal, you can then go about assessing the extent to which the IP position supports or detracts from them and refine your deal strategy.

Type of IP

Firstly, understand which types of IP might underpin the various value drivers in the proposed deal so that you can focus on them.

I was recently asked to work through an IP strategy discussion with a reasonably well-known publicly listed company. A senior executive mentioned in passing that recent acquisition targets were asking for a premium for their ‘brand’ in proposed deals. On further discussion, it became apparent that trade mark protection was scant or non-existent in these targets. While this company went on to take up some of those opportunities, they paid only for the common law rights to the brands, and at a serious discount to the figure that would have been paid if trade marks were offered as part of the deal.

Time until expiry

This is pretty simple. IP rights are all about monopolies and some IP rights have a set term – ie Patents, Designs and Copyight. So, clearly the older one of these rights is, the less valuable it is to you.

Trade marks live forever (provided that you keep paying renewals – more on this later). Confidential information is a tough one – it theoretically doesn’t expire, but most confidentiality clauses have time limits (often imposed by local case law). So you should pay careful attention to all non-disclosure agreements and their clauses if confidential information is a substantial value-driver in your deal. (Unfortunately, of course, it is what you’re not told that is most damaging here.)


If the target doesn’t have the relevant IP rights in one of your countries of interest, then there’s no need to pay for them. This is a simple thing to check, which will save e a lot of money or change the course of the negotiation. You may find that there’s no need for a deal at all.

Termination (status of the IP)

If relevant IP rights supporting the value proposition exist in the right countries and with sufficient remaining term, then check that all renewals are paid and up to date. If the IP rights have irretrievably lapsed, then, to be blunt, they are worthless.

As I mentioned in my earlier article, status information needs to be dealt with carefully, and in most countries, may take a while before lapse becomes irretrievable.

Technical Scope

So, your target is telling you that they have 15 patent applications, 4 granted patents and a couple of trade marks relating to the product of interest. But, it will all be useless if the technical scope is insufficiently broad (or worse, misdirected).

By ‘misdirected’, I mean the situation where the claims of the relevant patent don’t cover the product you’re acquiring / licensing. Notwithstanding the premium you paid for the patents rights, your competitors will be free to produce exact copies.

By ‘insufficiently broad’, I mean that while the claims cover the product of interest, they are easy to avoid with simple work-arounds so that your competitors can readily compete using a non-infringing product. The same applies to trade marks if for example you have to rely on goods or services being related because the specification of goods and services were drafted too narrowly, or your mark includes an unnecessary limiting aspect (such as a visual device) which narrows its scope.

True monopoly (validity of the IP Right)

To be sure, a broader technical scope is a double-edged sword as along with the increased monopoly comes a greater risk of invalidation. Again, you might find that an IP right performs perfectly on the first 5 T’s, but it will again be worthless if it is in fact invalid.

I realise that most due diligence exercises won’t (and shouldn’t) allow for a full validity assessment, but there are a number of simple things that you can do to at least form a preliminary view about this.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.