Devoted to Corporate Attorneys, Corporate Lawyers, and Corporate Counsel

The following is not meant to be legal advice.

Louis R. Dienes wrote an article on intellectual property issues in mergers and acquisitions in the September 2004 of the California Bar Journal.  For those attorneys working in high technology, the article may be an interesting read on how to structure a transaction based on the assets purchased.

Dienes wrote that asset purchases, for instance, might be preferred for buyers because of the ability to select the assets and liabilities.  For example, the buyer may want the engineers who built a product but not the administrative staff who negotiated the contracts. 

Comparing stock purchases, the seller may like these types of transactions because there are fewer consents needed from third parties such as licensors of inbound technology. 

The most common merger structures are reverse triangular mergers.  The seller survives as a subsidiary of the buyer, and a continues the business not requiring consents from outside parties.  There are also forward mergers where the acquisition subsidiary formed by the buyer survives.

Usually mergers require resolutions by the board of directors, and sometimes stockholder approvals. 

Dienes wrote about diligence strategies including discussions on patents, trademarks, copyrights.  He went into detail to define patent rights.  As to trademarks, he explained they were territorial such as a trademark registered in the United States only protected in the United States as opposed to foreign jurisdiction observation. 

Dienes advised to review indemnifications by the seller.