acc m&a dec v5
TRANSCRIPT
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ACC SF BAY AREA
CORPORATE AND SECURITIES COMMITTEE
NUTS AND BOLTS OF M&A TRANSACTIONS
STRUCTURING IP AND TECHNOLOGY
ACQUISITIONS
December 7, 2015 Silicon Valley
December 8, 2015 San Francisco
This presentation is offered for informational purposes only, and the content should not be construed as legal advice on any matter.
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Speaker introductions
Jeffrey AronsonPartner, Technology
Transaction Group,
DLA Piper
Victoria LeePartner, Co-Chair,
Global Technology
Sector, DLA Piper
Louis LehotPartner, Corporate,
Securities and
M&A, DLA Piper
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Speaker introductions continued
Phil StraussVP of Operations &
General Counsel and
CPO, Health Fidelity, Inc
Alan SternCounsel, Cisco Systems
David SandoSenior Counsel, Salesforce
Alan Anderson Assistant General
Counsel, DataStax, Inc.
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Topics for discussion today
Transaction structure
Due diligence
Representations, warranties and indemnities
Red flag (or potential red flag) issues
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Transaction structure
Common deal structures
Stock purchase/merger
Asset
Benefits and disadvantages of each structure from an IP
perspective
Role of ancillary agreements
Transition services agreement
Licenses
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Due diligence
Differing approaches based on deal structure and timing
Scorched earth approach
Materiality approach
Importance in asset deals
Technology due diligence and the role of consultants
Security audits and penetration testing
Open source code scan
Code quality
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Representations, warranties and
indemnities
The role of sufficiency
Knowledge qualifiers and materiality
IP as a fundamental rep
The emerging role of rep and warranty insurance
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Red flag issue: IP ownership
Founders
Effective assignments
Employees
Taint of prior employers
Missing PIIAs
Professors
Claims by universities
Consultants/contractors
Effective assignments
Remediation through confirmatory assignments as a condition
to closing
Joint ownership
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Red flag issue: open source
Level of diligence
Reviewing risk of taint
Ensuring open source compliance
Remediation and cost relative to deal value
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Red flag issue: key licenses and
agreements
Materiality based on revenue
Ensuring assignment of large revenue contracts
Materiality based on business
Ensuring assignment of key technology agreements
Avoiding patent leakage
Understanding material upstream obligations
Third-party licenses with ongoing payments
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Applying best practices to hypotheticals
Diligence reveals Target has distributed GPL v2 code
compiled with key Target proprietary code and not in
compliance with GPL agreement
Target’s patent license with Buyer competitor seemingly
sweeps in Buyer’s patent portfolio
Key IP is in-licensed from founders
Target jointly owns with the developer source code to main
product and has failed to disclaim duty to account
Target counsel insists on qualifying fundamental reps (like title)
with materiality and knowledge qualifiers
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Hypo 1:
Diligence reveals Target has distributed GPL v2 code
compiled with key Target proprietary code and not in
compliance with GPL agreement
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Hypo 2:
Target’s patent license with Buyer competitor seemingly
sweeps in Buyer’s patent portfolio
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Hypo 3:
Key IP is in-licensed from founders
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Hypo 4:
Target jointly owns with the developer source code to main
product and has failed to disclaim duty to account
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Hypo: 5
Target counsel insists on qualifying fundamental reps (like title)
with materiality and knowledge qualifiers
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Conclusion
Anticipate issues before they arise
Seek practical solutions
Keep big picture in mind
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Questions from the audience and panelists comments
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Upcoming programs…
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Thank you for attending