When Volkswagen Group offered £430 million for the assets
of Rolls-Royce Motors in 1998, legend has it that Volkswagen
acquired the factory, plus the rights to certain brands, but not
the famous Rolls-Royce trade-mark name. The Rolls-Royce brand was
in fact controlled by aircraft-engine maker Rolls-Royce plc, not
Rolls-Royce Motors. Thus, after the acquisition, Volkswagen had no
rights to the valuable Rolls- Royce brand name, and they watched as
rival BMW snapped up the trade-mark rights for £40 million.
The lesson? Get advice on intellectual property (IP) issues when
negotiating your business deal.
IP assets can be critical in the course of corporate-commercial
transactions such as:
the purchase and sale of business assets;
equity investments or share sales;
secured loans or credit facilities;
buy-outs, mergers and take-overs.
Many companies – even those that are not pure
technology businesses – have important IP assets that
require special attention in the course of negotiations. If you are
a business owner, consider these important steps:
Review IP protection and registration requirements when
positioning your company for a sale or investment. For example,
consider patentability for proprietary inventions, review
trade-marks and branding and consider obtaining registrations; get
advice on copyright registrations and industrial design
Prior to entering into negotiations, consider a full IP audit:
a comprehensive review of IP assets, which can cover everything
from the current status of Canadian and foreign IP registrations,
to chain-of-title issues, invention disclosures, licenses
agreements and confidentiality policies. An audit will also
catalogue all technology that is owned, in-licensed, out-licensed
and subject to security interests. This ensures that you, as a
business owner, know what assets you hold, you know the status of
those assets, as well as any gaps that need to be filled to ensure
your IP portfolio is well-managed.
During the course of negotiations, investors, lenders or
purchasers will want to complete due diligence. For buyers or
investors, the due diligence process should determine whether the
company's business depends upon proprietary IP, or in-licensed
technology. In some cases, a virtual data room is appropriate, to
post details on IP assets and registrations.
Asset purchase documents should address IP issues specifically.
Take time to review and negotiate these provisions, as they have
important implications for both buyer and seller. IP assets should
not be automatically lumped in with other acquired assets. In
particular, the documents should: (i) define the scope of purchased
IP assets, including the attendant rights and liabilities; (ii)
contain appropriate representations and warranties regarding the
acquired IP assets; (iii) reflect the pre- and post-closing
covenants relating to IP assets; (iv) address IP infringement and
litigation issues; and (v) contemplate additional documents such as
assignments and forms that will be filed with the appropriate
Canadian or foreign intellectual property registry.
Lastly, consider the timing of the release of funds in closing
an asset purchase deal which involves the acquisition of IP assets
such as patents or trade-marks in Canadian or foreign
jurisdictions. Transfers can take several days or weeks to be
recorded in a foreign registry and a purchaser may consider holding
a portion of the closing funds until the transfer is properly
UPDATE: SOUND MARKS IN CANADA
The Canadian Intellectual Property Office (CIPO) has announced
that it will accept sound marks for registration in Canada. A
lawsuit by MGM paved the way for this development. MGM has pursued
its iconic "lion's roar" as a sound mark since the
application was first filed in October, 1992. Applications for the
registration of a trade-mark consisting of a sound should:
State that the application is for the registration of a sound
Contain a drawing that graphically represents the sound;
Contain a description of the sound; and
Contain an electronic recording of the sound.
THE LAW OF MOBILE APPS
The law of mobile apps is a constantly evolving area in Canada.
Our team has developed custom iOS end-user license agreements and
has advised app developers in the areas of licensing, click-through
agreements, copyright, patents, trade-marks and privacy law. See
applaw.ca for updates and contact our licensing lawyers for advice
in this area.
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 Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Federal Court dismissed a motion by Apotex seeking particulars from Allergan's pleading relating to the prior art, inventive concept, promised utility and sound prediction of utility of the patents at issue.
Last year we saw the Canadian Courts release trademark decisions that granted a rare interlocutory injunction, issued jailed sentences for failure to comply with injunctive relief, grappled with trademark and internet issues...
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).