IP in M&A: 5 steps to manage the recordal process

Planning is crucial to the safe transfer of an IP portfolio following merger or acquisition (M&A), no matter the timescales involved. Minimise the impact on your business and resources with these five steps for recording change of ownership.

As with the transfer of ownership of real property, there is a significant difference between agreeing to transfer IP rights and the completion of the formalities required for the actual change of ownership. The latter requires compliance with formal procedures across multiple jurisdictions and often with multiple authorities – a complicated and time-consuming task. The recommended process set out below will help to smooth that process and minimise the stress for in-house teams.

Step 1: Schedule the transfer

The purchasing company should receive a schedule of registered IP rights and pending applications. It is vital that this includes information relating to upcoming deadlines, e.g. renewals, oppositions etc. The selling company should notify its own IP team plus all external agents and advisers that responsibility as of a certain date passes to the purchaser, and the purchaser’s agents and advisers. There needs to be a through round of communication to all relevant parties to ensure that this change of responsibility is understood and actioned.

Step 2: Verify the data before you import it

The purchasing company and its agents/representatives should take steps to verify that the information with which they have been provided is correct and reflects the present state of the official record in every jurisdiction. This should be done by evaluating the IP assets in question, e.g. by:

• identifying the countries where they are registered;
• assessing the chain of title and identifying any integrity issues; and
• selecting foreign agents in each country to carry out the updates on their behalf.

In order to adhere to the strict formalities that exist in many jurisdictions, it’s important that IP transactions, such as transfers of ownership or changes against the official record, must not only be notified to the appropriate patent and trademark offices in a timely manner, but also managed and stored appropriately within the organisation itself.

To build an IP recordal management programme to deliver this, companies need to first understand and identify the complexity, the dangers and the requisite levels of expertise needed to manage the work successfully. This will likely vary depending on:

• the number of countries across a portfolio;
• the number of changes of ownership that need to be updated;
• the presence of multiple owners within a given portfolio;
• any uncertainty about the current status of official ownership records;
• the need to update the chain of title before recordals can be made; and
• the number of foreign agents in the same country that are engaged in (and therefore need to be managed through) the process.

Step 3: Confirm the formalities

Take local advice in each and every jurisdiction where rights are to be transferred. Requirements vary from country to country, and local practice and rules can be rather fluid. Likewise, requirements within a single jurisdiction can be different for different types of IP; don’t assume that a single document will suffice for all IP rights. 

Bear in mind that documents will often require the signature of both the old and new owners. Logistically, it is simpler to have a single signing session for each party with a complete set of documents signed in one session.

The documents typically required are:

• Confirmatory assignment
• Certificate of incorporation
• Power of attorney

In many jurisdictions, notarial certifications and legalisation stamps will also need to be obtained and applied. Supporting material may also need to be supplied, e.g. evidentiary documentation and power of attorney documents. Arrange for these documents to be signed in the presence of a notary and factor in time for the additional preparation depending on the laws of each country involved. Those that require legalisation should be sent promptly to the relevant authorities (embassies and consulates).

Step 4: Keep track of progress – especially if personnel or suppliers change

The completed forms will normally accompany an application form and fee by which the application to record the change of ownership is formally recorded. This will mostly be carried out by local agents/representatives acting under the authority of a power of attorney. Agents should be instructed in order of priority, and time factored into chase them for timely responses and to update internal responses as and when responses are received.

The speed with which the local authorities process applications to record changes vary enormously from a few days to, in the most extreme cases, several years. The purchasing company’s IP team needs to keep track of this, and to maintain internal records to reflect the status and up-to-date details.

Step 5: Double-check confirmations

Confirmation of the recordal of the change of ownership will come from the authorities in each jurisdiction by way of certificate or some other formal communication. Make sure you receive all confirmations of the updates by monitoring the files. Updated recordals should be registered as receipts, and you’ll need to check and address errors and omissions with agents as they arrive. You also need to factor in time needed to manage foreign agent invoices, the updating of internal records and the budgeting and costs for staff time, among other things. 

Don’t underestimate the task

The work involved in post-transaction recordal of changes of ownership of IP rights requires a blend of skill and knowledge. It demands considerable expertise in international IP administration; access to, or knowledge of, the current international rules and documentary requirements for filing ownership changes; and the resources to manage competing deadlines and multiple lines of communication. Importantly, it also necessitates access to a knowledgeable network of local representatives in all jurisdictions where IP rights are held.

For these reasons, it is sound practice to employ the services of an expert team that can safely and cost-effectively manage such a project through to completion. If you choose to utilise internal resources, consider their qualifications and existing workloads; if you choose to recruit outside support, try to balance experience, expertise and cost. Although the process is complicated, it is easy to manage if the correct support is in place.

Find out more

Novagraaf routinely manages IP recordal work on behalf of our clients. Please speak to your Novagraaf attorney or contact us below if you need specific or general advice in this area. For general advice on preparing IP in advance of a merger or acquisition, see 'Time to get it right: IP in mergers and acquisitions'.