asset acquisitions - Jackson Walker LLP

COMMENTThe definition of “Intellectual Property Assets” encompasses all forms of intellectualproperty, including the forms expressly identified.The representation in Section 3.25(b) requires the Seller to list license agreementsand other agreements that relate to the Intellectual Property Assets, such as a covenant not tosue in connection with a patent, a noncompetition agreement, a confidentiality agreement, amaintenance and support agreement for any software the Seller is licensed to use, or anagreement to sell or license a particular asset. Disclosure of such agreements enables a buyerto identify which of the Intellectual Property Assets are subject to a license or otherrestriction and to determine whether the seller has the exclusive right to practice certaintechnology.If there is a general representation that all of the seller’s contracts are valid andbinding and in full force and effect and that neither party is in default (see Section 3.20), aseparate representation is not needed in this Section. If there is not a general representationon contracts, or if it is limited in some way, the buyer should consider including such arepresentation in this section, especially if the seller licenses intellectual property that isimportant to its business.The seller may object to the representation called for in clause (i) of Section 3.25(c)as too subjective and try to force the buyer to draw its own conclusion as to whether theseller’s Intellectual Property Assets are sufficient to operate its business.Whether a buyer will want to include the representations in Section 3.25(d)-(g)depends upon the existence and importance of the various types of intellectual propertyassets in a particular transaction. For example, patents and trade secrets can be the key assetof a technology-driven manufacturing company, while trademarks and copyrights could bethe principal asset of a service company. Below are descriptions of the main categories ofintellectual property and how they are treated in the Model Agreement.Patents. There are three types of United States patents. A “utility patent” may begranted under 35 U.S.C. § 101 for “any new and useful process, machine, manufacture, orcomposition of matter, or any new and useful improvement thereof.” Patents also may begranted under Chapter 15, 35 U.S.C. §§161-164 (a “plant patent”) for new varieties of plants(other than tuber or plants found in an uncultivated state). Finally, a patent may be grantedunder Chapter 16, 35 U.S.C. §§ 171-173 (a “design patent”) for a new, original, andornamental design for an article of manufacture.In the United States, the patenting process begins with the filing of a patentapplication in the Patent and Trademark Office (“PTO”). Except under certain limitedconditions, the inventor (or the inventor’s patent attorney) must file the application. A patentapplication or a patent may be assigned by the owner, whether the owner is the inventor or asubsequent assignee.The term “patent” as used in the definition of Intellectual Property Assets includesutility, plant, and design patents, as well as pending patent applications and patents grantedby the United States and foreign jurisdictions, and also includes inventions and discoveriesthat may be patentable.3148166v1- 99 -