Metis Partners was engaged by a debt finance provider to conduct commercial IP due diligence of an established high-tech company with a vast patent portfolio, in excess of 250 filings, protecting a plurality of technologies worldwide. The Company generated significant revenues through license royalties and sales, however, to expand its operations and technology development, it was seeking growth capital.
Metis Partners was engaged to identify the critical IP assets of the Company; identify risks which could undermine their value; provide the necessary assurances prior to providing financing to the Company; and advise on actions that could de-risk the transaction.
We conducted an on-site day with the Company and adopting our Metisology®, identified and mapped the IP, including patents, know-how and trade secrets, to historical and forecast revenues of the business. The Company had created a wealth of IP and owned a large patent portfolio, but it was vital for our Client to understand which of the IP assets were most critical to the Company’s competitive advantage.
Our assessment revealed two main risks - critical patents, which claimed platform technologies, were likely to expire shortly after financing terms expired; and complementary and dependent critical patents claiming unique aspects of the Company’s technology, were not relied upon and/or had lapsed or remained pending for a duration, which would render granting unlikely or minimal in value.
Our IP diligence did, however, uncover a wealth of know-how and trade secrets, which had not been fully recognized by the Company, but which backstopped its core patents. This “unregistered” IP would allow the Company to continue operating with minimal threat of competition once its core patents expired.
Interestingly if the assignment had focused on only the patent status, it might have erroneously misguided the Client in its financing decision. Our Metisology® approach ensures an IP asset is not analyzed in isolation. We only provide our opinion when we are confident that we have full picture of the IP landscape.
We advised the Client on which of the Company’s patents it should register as security and provided recommendations to minimize risk. The Client worked with its counsel in order to translate our recommendations into legally binding provisions.
Ultimately, our IP diligence provided the Client with sufficient assurance to proceed with financing and helped an already successful hi-tech company to secure vital growth funding.
IP Assets Appraised – Patents, Trade Secrets, Organizational Knowledge, Know-How
