If you are looking to shop your young business to bigger players, solidifying your intellectual property (“IP”) rights is crucial. Customers, contacts, and capital might be what catches the eye of prospective buyers. But what can make or break a deal is how solid the legal foundation is for your operation. Ask yourself these four questions:
1. Do you have patent protection for key technologies implemented in your business? Convincing a prospective buyer that no one can do your business like you do is much easier when no one can legally do your business like you do. Patents prevent others from copying your technology.
2. Are you potentially infringing the IP of others? A small company with small production might avoid the attention of a patent or trademark holder. Prospective buyers with deeper pockets are more likely to attract the attention of litigious IP rights holders, so they are going to be careful about issues of infringement.
3. Are your trademark rights shaky? A buyer might have big plans to use and expand use of your trademark, but your trademark might be a bit too similar to a competitor’s mark making those plans risky.
4. Are you sure who owns your IP? Agreements should be in place to make certain that intellectual property developed by independent contractors, employees, shareholders, and partners stay with your company. Prospective buyers want to be sure that you own the IP used in your operation.