August 05, 2019 Feature

Trade Secret Diligence in M&A

James Pooley

©2019. Published in Landslide, Vol. 11, No. 6, July/August 2019, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

When one company looks at buying another, the potential buyer engages in a “due diligence” process designed to help it fully understand the relevant risks and opportunities before the deal is done. In today’s digital economy, most business assets are intangible, and so intellectual property (IP) is among the most meaningful of the variety of issues that an acquirer needs to examine. But while most due diligence checklists include dozens of questions pointed at the target company’s patents, trademarks, and copyrights, trade secrets get relatively little attention, often limited to a single request to confirm that the target has some system in place to protect its secrets from unauthorized disclosure.

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