acc m&a dec v5

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.

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

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.

Topics for discussion today

Transaction structure

Due diligence

Representations, warranties and indemnities

Red flag (or potential red flag) issues

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

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

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

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

Red flag issue: open source

Level of diligence

Reviewing risk of taint

Ensuring open source compliance

Remediation and cost relative to deal value

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

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

Hypo 1:

Diligence reveals Target has distributed GPL v2 code

compiled with key Target proprietary code and not in

compliance with GPL agreement

Hypo 2:

Target’s patent license with Buyer competitor seemingly

sweeps in Buyer’s patent portfolio

Hypo 3:

Key IP is in-licensed from founders

Hypo 4:

Target jointly owns with the developer source code to main

product and has failed to disclaim duty to account

Hypo: 5

Target counsel insists on qualifying fundamental reps (like title)

with materiality and knowledge qualifiers

Conclusion

Anticipate issues before they arise

Seek practical solutions

Keep big picture in mind

Questions from the audience and panelists comments

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