STRUCTURING IP AND TECHNOLOGY ACQUISITIONS

Transcription

1 ACC SF BAY AREA CORPORATE AND SECURITIES COMMITTEE NUTS AND BOLTS OF M&A TRANSACTIONS STRUCTURING IP AND TECHNOLOGY ACQUISITIONS December 7, 2015 Silicon Valley December 8, 2015 San Francisco This presentation is offered for informational purposes only, and the content should not be construed as legal advice on any matter.

2 Speaker introductions Jeffrey Aronson Victoria Lee Louis Lehot Partner, Technology Transaction Group, DLA Piper Partner, Co-Chair, Global Technology Sector, DLA Piper Partner, Corporate, Securities and M&A, DLA Piper

3 Speaker introductions continued Alan Anderson David Sando Phil Strauss Alan Stern Assistant General Counsel, DataStax, Inc. Senior Counsel, Salesforce VP of Operations & General Counsel and CPO, Health Fidelity, Inc Senior Corporate Counsel, Cisco Systems

4 Topics for discussion today Transaction structure Due diligence Representations, warranties and indemnities Red flag (or potential red flag) issues

5 Transaction structure Common deal structures Stock purchase/merger Asset Benefits and disadvantages of each structure from an IP perspective Role of ancillary agreements Transition services agreement Licenses

6 Due diligence Differing approaches based on deal structure and timing Scorched earth approach Materiality approach Importance in asset deals Technology due diligence and the role of consultants Security audits and penetration testing Open source code scan Code quality

7 Representations, warranties and indemnities The role of sufficiency Knowledge qualifiers and materiality IP as a fundamental rep The emerging role of rep and warranty insurance

8 Red flag issue: IP ownership Founders Effective assignments Employees Taint of prior employers Missing PIIAs Professors Claims by universities Consultants/contractors Effective assignments Remediation through confirmatory assignments as a condition to closing Joint ownership

9 Red flag issue: open source Level of diligence Reviewing risk of taint Ensuring open source compliance Remediation and cost relative to deal value

10 Red flag issue: key licenses and agreements Materiality based on revenue Ensuring assignment of large revenue contracts Materiality based on business Ensuring assignment of key technology agreements Avoiding patent leakage Understanding material upstream obligations Third-party licenses with ongoing payments

11 Red Flag Issue: Data Rights Not technically intellectual property but increasingly valuable asset Privacy policy review Determining what data is collected, where it is stored and how it is used Can the data be transferred in an acquisition Including appropriate representations and warranties

12 Applying best practices to hypotheticals Diligence reveals Target has distributed GPL v2 code compiled with key Target proprietary code and not in compliance with GPL agreement Target s patent license with Buyer competitor seemingly sweeps in Buyer s patent portfolio Key IP is in-licensed from founders Target jointly owns with the developer source code to main product and has failed to disclaim duty to account Target counsel insists on qualifying fundamental reps (like title) with materiality and knowledge qualifiers

13 Hypo 1: Diligence reveals Target has distributed GPL v2 code compiled with key Target proprietary code and not in compliance with GPL agreement

14 Hypo 2: Target s patent license with Buyer competitor seemingly sweeps in Buyer s patent portfolio

15 Hypo 3: Key IP is in-licensed from founders

16 Hypo 4: Target jointly owns with the developer source code to main product and has failed to disclaim duty to account

17 Hypo: 5 Target counsel insists on qualifying fundamental reps (like title) with materiality and knowledge qualifiers

18 Conclusion Anticipate issues before they arise Seek practical solutions Keep big picture in mind

19 Questions from the audience and panelists comments

20 Upcoming programs

21 Thank you for attending