IP: Keeping your company’s information confidential in today’s world of due diligence

The topics a company should consider (and seek expert advice on, as necessary) as they enter any negotiation

It is the dream of many start-up companies to enter negotiations with a third-party investor or buyer for acquisition, licensing or funding raising opportunities. Due diligence of the start-up company’s intellectual property will likely be at the forefront of such negotiations. Numerous scenarios arise that require thoughtful consideration in order to maintain confidentiality of sensitive corporate information. For example:

  • Your company has developed a new technology that you want to present to venture capitalists for funding, but you don't want them to take the idea and develop it on their own.
  • Your company needs to hire an expert (e.g., a consultant to assist with technology development or an expert witness to support a patent office proceeding or litigation), but you don't want him to disclose information to your competitors.
  • Your company is trying to sell or license a technology to a buyer who wants details on your company’s IP, but you are concerned that the buyer will kill the deal after examining your company’s confidential information.
  • Your company is involved in one or more of the above scenarios and you do not want the sharing of your information to be considered a public disclosure that would potentially bar subsequent patenting.

Due diligence in today’s digital world presents particularly challenging questions arising from communications between companies throughout the due diligence process. Adding to the difficulty and delicacy with which confidential information must be handled throughout due diligence, urgent deadlines may require immediate disclosure of highly sensitive corporate information to third-party investors or buyers. Given today’s electronic communication technologies and the speed at which information can be transmitted and copied, maintaining confidential information during due diligence is a challenge.

Contributing Author

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Eric M. Brusca

Eric M. Brusca, Ph.D. is a partner at Marshall, Gerstein and Borun LLP. His practice focuses on biotechnology patent prosecution for a...

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