General

"Intellectual property due diligence can sort out the company's intellectual property status and analyze the risks of the company's intellectual property, which is especially important for high-tech enterprises with patents as their core assets." In the seminar on intellectual property due diligence and corporate investment, Wang Lei of Haiwen Law Firm said that if companies do not conduct due diligence on intellectual property rights, they may face risks such as affecting investment valuations and declining profitability.

For example, Wang Lei said that during a joint venture negotiation between an automobile factory in Beijing and a foreign businessman, the foreign party proposed a specific plan for the method of technology investment, and 97 patented technologies were used for a total of 16 million US dollars. Since the company does not understand patent law, it hastily signed the contract without understanding the legal status of these patented technologies. It was not until later that we learned that 23 of the 97 foreign patents are expired, 29 patents are close to expiration, and 13 have just submitted applications without authorization. There are only 32 patents that really count. 33% of the total number of patents. As a result, the value of the shares was greatly discounted, and the company suffered heavy losses.

Wang Lei said that when conducting intellectual property due diligence, it is necessary to first determine the scope of intellectual property due diligence according to the company's own needs, make a personalized survey list, and issue questionnaires. Then check the documents provided by the enterprise to check the status of the enterprise's own intellectual property rights, the situation of intellectual property litigation, the stability of core patents, whether the core products can be freely implemented, etc. Finally, write the report. After the intellectual property due diligence report is completed, the enterprise can communicate with the target company to discuss the solution method and time limit for the problems involved in the report, and require the target company to enter into various confirmation letters and commitment letters to confirm the method of risk-taking and calculation of losses.

Among them, the risk of confidentiality contracts and non-compete agreements between key employees and former employers is one of the typical problems. "It often happens that the former employer of the employee affects the ownership of the company's intellectual property rights, and this kind of situation mostly occurs in technology companies." Wang Lei said, for example, Hanglory Group developed and produced digital inkjet printing equipment, and applied for science and technology innovation in April 2020. Board IPO. The cause of the trade secret dispute involved in this matter is that Zhao was a R&D engineer of Runtianzhi and participated in the research and development of a flat-panel inkjet printer of Runtianzhi. In November 2009, Zhao resigned from Runtianzhi and joined a subsidiary of Hanglory Group. In July 2010, Hanglory Group subsidiary launched a flat-panel digital inkjet machine. Runtianzhi believed that part of the source code of the machine was the same as its product, and believed that Zhao violated the "Confidentiality Agreement" and violated trade secrets. After Hanglory Group applied for IPO, Runtianzhi sued Hanglory Group and its subsidiaries for infringing technical secrets, and made real-name reports for many times during Hanglory Group's IPO application. In the end, Hanglory Group was forced to terminate the IPO on the Science and Technology Innovation Board, and Zhao was convicted of violating trade secrets in November 2021.

"In such a situation, the enterprise needs to establish a sound trade secret protection system to regulate the employee's personal behavior. If there is a dispute over a service invention, you can communicate with the employee's former employer to make joint arrangements for intellectual property rights. Pay a certain fee, or adopt joint development to achieve win-win cooperation. If the company registers its intellectual property assets in the names of employees who have left, or in the names of employees who have left for less than a year, it may also lead to service invention disputes. It can be seen that enterprises should clarify the normative use of intellectual property rights when signing labor contracts." Wang Lei said.

In addition, whether investing in or acquiring exporting companies or non-exporting companies, FTO investigations can also be conducted according to their own needs. Wang Lei said that FTO, also known as free implementation of due diligence, refers to the ability to carry out legal due diligence within a certain geographical scope in order to determine whether a technology or a product is not hindered by third-party intellectual property rights. For non-exporting enterprises, it is possible to investigate whether their production, sales, and offering to sell in their own countries constitute patent infringement. For exporters, it is also possible to investigate whether their import, sales or offering to sell in the target country constitutes patent infringement in the target country.

Wang Lei said that companies usually entrust professional agencies to conduct FTO investigation and analysis of their specific products, and professional agencies will issue corresponding FTO analysis reports. In this way, even when the alleged infringement is established, the possibility of being found to be malicious intentional infringement can be reduced.