It is important for any company licensing technology from another to ensure that the Licensor has the rights to the technology in question and that proof in this regard is furnished. The type of evidence furnished will depend on the technology being licensed. In the case of patents, trade marks and industrial designs applications/registrations, copies of pending applications or granted registrations will suffice. However, in the case of unregistered property (such as copyright), more substantial evidence will be needed and what that evidence will be will vary in each case. Legal and patent advice should be sought when assessing the licensed technology.

The due diligence exercise is intended to protect against the risk that the rights granted under the licence prove to be incomplete or incorrect, with the potential for liability and loss being incurred and suffered by the Licensee. The information gained from due diligence will enable the Licensee to satisfy themselves that the technology can be properly licensed to it. The format of the due diligence will depend on the nature of the transaction and the level of risk involved and can be very time consuming as well as costly in terms of money and resources.

Technical and commercial due diligence should also be carried out to ensure that the technology is fit for purpose and is likely to be achieve its commercial objectives.

Step 3 - Evaluation of Proposed Venture|Step 5 - Term Sheets