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A busy time for M&A activity inevitably includes increased due diligence work. Let's be honest: due diligence is the necessary, essential, but the oh-so-very grunt work of a transaction. Middle and junior level staff, rather than senior lawyers (excluding this hoary Kat, who quite likes being involved in IP due diligence) tend to be engaged in carrying out the bulk of the work.

Being in the midst of such a period at the moment, I am once again struck by the special nature of due diligence in connection with IP, being one part forensics and one part document discovery. Starting with a tabula rasa about a company, we proceed to try and figure out: (i) what IP rights the company owns or uses; (ii) how robust are these rights; and (iii) how unassailable are the company's claims to these rights. If we get it wrong, and it turns out that the company does not have that the IP rights that it claims, in whole or in part, reliance on the breach of a warranty or representation to the contrary may be of limited solace to the frustrated acquirer. For that reason, perhaps delusionally, I like to believe that IP due diligence is special.

Against this backdrop, there are number of generic issues regarding IP due diligence that seem to pop up time after time. Permit me to share some of them below:

1. What is the company's cost/benefit analysis in having the IP due diligence be carried out by a one-stop shop law firm versus preferring an IP specialist firm for certain issues, such as prosection and validity of IP rights?

2. What is the best way to handle multi-country patent or trade mark portfolios as part of due diligence (and how does legal insurance impact on this)?

3. Within the law firm, should the IP due diligence be coordinated separately from other aspects of the transaction's due diligence process?

4. To what extent should the persons with overall responsibility for the due diligence be present at meetings or telephone calls regarding IP matters?

5. Should certain categories of contracts, such as employment agreements and licensing contracts, be reviewed in their entirety by a single person, or should their review by divided among the appropriate practice groups, including from the IP angle?

6. How much pressure should be brought to bear on the target company to disclose relevant IP information and documents, some of which may form the basis for extensive scheduled exceptions to the warranties and representations, or should the acquirer prefer to rely on broad undertakings in the representations and warranties?

7. To what extent should the relevant persons at the target be interviewed during the due diligence process and at what stage?

8. To what extent should the IP due diligence run on a parallel track to the negotiations over the relevant IP representations and warranties, or should the two be conducted in seriatim?

9. Should the law firm ask to see any and technical due diligence carried out on behalf of the client and under what conditions should the client company decline to share this information?

10. With respect to IP due diligence, is there a time factor in the process and does it work to the tactical advantage of the acquirer or the target?

11. To what extent does the nature of the transaction--acquisition versus investment--affect the scope and focus of the IP due diligence?

I think that I will settle for these 11 questions. Readers' further thoughts and comments to the list are most welcome.

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