INTELLECTUAL PROPERTYASSETS IN MERGERSAND ACQUISITIONS

Editors

Lanning BryerLadas & ParryNew York, New York

Melvin SimenskyVisiting Scholar in Intellectual Property LawNew York Law School

JOHN WILEY & SONS, INC.

CONTENTS

PREFACE xxvii

ACKNOWLEDGMENTS xxx

CHAPTER 1MERGERS AND ACQUISITIONS: AN OVERVIEW 1.1

PATRICK A. GAUGHAN, P H . D .

COLLEGE OF BUSINESS, FAIRLEIGH DICKINSON UNIVERSITY

ECONOMATRTX RESEARCH ASSOCIATES, INC.

Introduction 1.1Fifth Merger Wave Exported to Europe 1.1Fifth Merger Wave Compared to Prior Merger Periods 1.3

Types of Mergers, Acquisitions, and Corporate Restructurings 1.4Why Do Firms Merge? 1.5

Growth 1.5Synergy 1.5

Consolidating and Roll-Up Mergers of the Fifth Merger Wave 1.6Diversification 1.6Related versus Unrelated Diversifications 1.6Leveraged Transactions 1.6

Role of Intellectual Property in Mergers and Acquisitions 1.7

How do Mergers Turn Out and What Can Go Wrong? 1.7What Can Go Wrong with Intellectual Property Motivated Acquisitions? 1.8Trends in Deal Prices for the Fifth Merger Wave 1.8Winners and Losers in Mergers and Acquisitions 1.8Effects of Sell Offs 1.10

Conclusion 1.11

Endnotes 1.11

IX

x CONTENTS

CHAPTER 2THE ROLE OF INTELLECTUAL PROPERTY AND INTANGIBLE ASSETSIN MERGERS AND ACQUISITIONS 2.1ROBERT BOYDEN LAMB

NEW YORK UNIVERSITY STERN GRADUATE SCHOOL OF BUSINESS

Introduction 2.1

> A Firm's IP Has Become a Major Factor in Valuing M&A Deals 2.3

3M Corporation's Shift from Internal R&D for IP to A Mixture withExternal Acquisitions for New IP 2.4

The Winner's Curse in M&A Auctions and Its Effect on New IP Creation,Transfer, and Sharing 2.5

Investment Bankers Use Four Basic Methods of Valuing Mergers andAcquisition Transactions 2.6

Comparable Company Analysis 2.6Comparable Transactions Analysis 2.8Discounted Future 2.9

Steps to a Valuation 2.9Option Valuation 2.12

Damodaran's Option Valuation Procedure for a Patent 2.13Value of Underlying Asset 2.13Variance in the Value of the Asset 2.13Exercise Price of Option 2.13Expiration of the Option 2.13The Dividend Yield 2.13An Important Caveat on Investment Bankers Selection of Valuation Method 2.16

Alternative IP Valuation Methods 2.16

Today's Compression of the Product Life Cycle and ModernValuation Problems 2.17

Mergers and Acquisitions and the Consolidation of Market Power in

Various Industries in the World 2.19

Free IP Giveaways Impact M&A Growth and Price 2.22

Bundling of Free IP Add-ons Impact M&A Prices 2.23

Impact of Rapid Technological Advance on M&A Valuations 2.24

Merger Failure Is the Norm 2.25

Failed Merger Negotiations Risk IP Losses 2.27

Impact of New Internet IPO Market on M&A Prices 2.27

Typical M&A Valuation Problems of High-Technology Firms 2.28

M&A Valuation of IP Combines Investment Banking withStrategy Consulting 2.31

CONTENTS xi

Example of a Merger Valuation of IP in an Actual Transaction 2.33

Valuation: To Believe or Not to Believe 2.34

Models of Intellectual Property Firms: Incestuous Family, NetworkAlliances, Winner Take All, a Wheel of Fortune 2.37

Divestitures versus Acquisitions Signal the Driving Role of IP inToday's Businesses 2.38

Wheel of Fortune 2.39

AICPA Accounting Rule Changes Impact Merger and Acquisition

Transactions and Valuations 2.39

Before the Long-Term Change in Pooling Accounting Rules 2.40

Ranges of Intellectual Property Financial Valuation 2.42

Valuation of Established Intellectual Properties 2.42

Valuations of a Competitor's Intellectual Properties 2.44

Investment Bankers' Merger and Acquisition Valuation Problems 2.44

Endnotes 2.45

CHAPTER 3INTANGIBLE ASSETS AND INTELLECTUAL PROPERTY ACCOMPANYINGMERGERS AND ACQUISITIONS 3.1GORDON V. SMITH

AUS CONSULTANTS

Introduction 3.1

The Asset Portfolio 3.1Monetary As sets 3.1Tangible Assets 3.2

x Intangible Assets 3.3

Business Enterprise Value in Mergers and Acquisitions 3.3Acquisition Premiums 3.3Acquiring Intangibles 3.4

K Intangible Assets and Intellectual Property 3.4Rights 3.4Relationships 3.5

Assembled Workforce 3.5Customer Relationships 3.5Distributor Relationships 3.6

Undefined Intangibles 3.6Goodwill 3.6Going Concern Value 3.7

Intellectual Property 3.7Proprietary Technology 3.8Patents 3.9

xii CONTENTS

Copyrights 3.10Trademarks 3.11Internet Domain Names 3.13Computer Software 3.13Mask Works 3.15Right of Publicity . 3.15Intellectual Capital 3.15

Comment 3.16

Endnotes 3.18

CHAPTER 4VALUATION OF INTELLECTUAL PROPERTY ASSETS IN MERGERS AND ACQUISI-TIONS 4.1MICHAEL J. LASINSKI

INTECAP, INC.

Introduction 4.1

Reasons for Valuing Intellectual Property in Mergers and Acquisitions 4.2Strategic Reasons to Value Intellectual Property Management 4.2Transactional Reasons to Value Intellectual Property 4.2

Company Acquisition Planning and Due Diligence 4.2Licensing Intellectual Property 4.3Acquiring or Selling Intellectual Property (in the Absence of a Business Combi-nation) 4.4Establishing Equity Contributions 4.4Corporate Spin-Offs 4.4

Tax Reasons to Value Intellectual Property 4.4Intercompany Transfer Pricing 4.4Intellectual Property Management Subsidiary 4.5Charitable Donations of Patents and Related Technology 4.5Purchase Price Allocation 4.6In-Process R&D 4.6

Financial Reasons to Value Intellectual Property 4.6Obtaining Financing/Raising Capital/IP Asset-Backed Securitizations 4.6Reorganization/Bankruptcy/Loan Workouts A.I

Legal Reasons to Value Intellectual Property 4.7

Valuation Approaches and Their Application 4.7The Premise of Value: Fair Market Value 4.8The Sources of Potential Value 4.8

Valuation Approaches: Market, Cost, and Income 4.9Market Approach 4.9Cost Approach 4.9Income Approach (Discounted Cash Flow Analysis) 4.10

Amount of the Income Stream 4.11Duration of the Income Stream 4.13Accounting for the Risk of the Income Stream 4.13

CONTENTS xiii

Pricing Considerations in Licensing 4.16The Range of Negotiations: The Floor and the Ceiling 4.16

The Licensor's Theoretical Floor 4.16The Licensee's Theoretical Ceiling 4.17

Industry Royalty Rates 4.17Other Pricing Factors 4.18

Conclusion 4.18

Endnotes 4.19

CHAPTER 5ACCOUNTING FOR INTELLECTUAL PROPERTY DURING MERGERSAND ACQUISITIONS 5.1

ANDREW W. CARTER

INTECAP, INC.

Introduction 5.1

Accounting for Intellectual Properties in Mergersand Acquisitions 5.1

Asset Recognition 5.1Objective of Accounting System 5.2Financial Reporting of Business Combinations-General 5.2

The Pooling Method 5.2The Purchase Method 5.3Which Method to Use 5.3

Financial Reporting for Acquired Intangible Assets 5.3Amortization 5.5Tax Treatment 5.5Impairment of Intangibles 5.6

Proposed Financial Accounting Standards Board Changes and Recent Develop-ments 5.6

Proposed Elimination of the Pooling Method 5.6Goodwill and Amortization 5.7

In-Process Research and Development Charges 5.8Definition of In-Process Research and Development Charges 5.8Historical Treatment of Research and Development 5.8

Potential Changes 5.8Increased SEC Scrutiny of In-Process Research and DevelopmentWrite-Offs 5.9

Bibliography 5.10

Endnotes 5.11

xiv CONTENTS

CHAPTER 6INTELLECTUAL PROPERTY ASPECTS OF ACQUISITIONS 6.1GLENN A. GUNDERSEN

DECHERT

Introduction 6.1

Acquisition Agreement 6.1Contents of the Acquisition Agreement 6.2

Other Documents 6.3Transfer Documents 6.3

Obtaining Assignments of Licenses 6.4Ancillary Agreements and Obligations 6.4

Drafting the Description of Assets 6.5Identifying the Intellectual Property Being Transferred as Part of a Stock Sale 6.5Identifying the Intellectual Property To Be Transferred in an Asset Sale 6.5Determining the Disposition of Jointly Used Intellectual Property 6.7

The Substance of Intellectual Property Representations and Warranties 6.7

How Intellectual Property Law Affects Representations and Warranties 6.8Patents 6.8Trademarks * 6.9Copyrights 6.10Trade Secrets 6.11Rights of Publicity 6.11Industrial Design Rights 6.11Internet-Related Assets 6.11

Negotiating Representations and Warranties 6.12

Indemnification 6.16

Endnote 6.17

CHAPTER 7U.S. ANTITRUST AND INTELLECTUAL PROPERTY IN MERGERSAND ACQUISITIONS 7.1THOMAS G. JACKSON

PHILLIPS NIZER BENJAMIN KRIM & BALLON, LLP

Introduction 7.1

Enforcement Agency Policies 7.2Horizontal Merger Guidelines 7.2Non-Horizontal Merger Guidelines 7.2Antitrust Guidelines for the Licensing of Intellectual Property 7.3Antitrust Guidelines for Collaborations Among Competitors 7.3

Intellectual Property Issues in Merger Cases 7.3Horizontal Mergers and Joint Ventures 7.3

CONTENTS xv

Vertical Mergers 7.5Mergers Involving Horizontal and Vertical Restraints 7.6Exclusive Licensing 7.7

Conclusion 7.7

Endnotes 7.7

CHAPTER 8INTELLECTUAL PROPERTY AND TECHNOLOGY DUE DILIGENCE INBUSINESS TRANSACTIONS 8.1SHELDON BURSHTEIN

BLAKE, CASSELS & GRAYDON, LLP

Introduction 8.1Need for Intellectual Property and Information Technology Due Diligence 8.1What Due Diligence Is 8.3Identification of the Nature of Primary and Related Transactions 8.3

Share Purchase 8.4Asset Purchase 8.4Purchase from Receiver or Trustee 8.4Financing 8.5

Due Diligence by Parties Other than the Purchaser 8.6Due Diligence by Seller 8.6Due Diligence by Borrower 8.7Due Diligence by Issuer 8.7

Scope and Cost of Work for Intellectual Property and TechnologyDue Diligence 8.8

Time 8.8Cost 8.8Nature of the Transaction 8.9Ancillary Agreements 8.9Nature of the Business 8.10Value of Intellectual Property and Information Technology 8.11Structure of the Business 8.11

Domestic Issues of Multinational Transaction 8.13Multiple Location Business 8.13International Businesses 8.13Plans for the Business 8.14The Marketplace 8.14Assistance 8.15S ecrecy Agreements 8.15Representations, Warranties, and Opinions 8.15Transitional Issues 8.16

X Intellectual Property Rights 8.16Overview of Intellectual Property 8.16

Patents 8.18Types of Searches 8.19

xvi CONTENTS

Limitations of Searches 8.21Follow-up 8.22

Designs 8.23Types of Searches 8.23Limitations of Searches 8.24Follow-up 8.25

Trademarks 8.25Types of Searches 8.26Limitations of Searches 8.27Trade Dress 8.28Domain Names 8.28Follow-Up 8.29

Tradenames 8.30Copyright 8.31

Types of Searches 8.32Limitations of Searches 8.32Moral Rights 8.32Neighboring Rights 8.33Database Rights 8.33Follow-up 8.33

Semiconductor Chip Rights 8.33Plant Rights 8.34Personality Rights 8.35

Proprietary Information 8.35Foreign Rights 8.36Secured Intellectual Properties 8.37On-Site Technology Investigations 8.39Products, Advertising, and Packaging 8.39Intellectual Property Maintenance Costs 8.40

Contract Review 8.40Agreement Review 8.40Secrecy Agreements 8.42License Agreements 8.42Assignments 8.43Franchise Agreements , 8.43Distribution and Supply Agreements 8.43Co-packing and Toll Manufacturing Agreements 8.44Joint Venture and Strategic Alliance Agreements 8.44Research and Development Agreements 8.44Government Agreements 8.45Sponsorship and Co-promotion Agreements 8.45Advertising Agreements 8.45Employee and Contractor Agreements 8.45Settlement Agreements 8.47Information Technology Agreements 8.47

Information Technology Issues 8.47Hardware 8.47Software 8.48

CONTENTS xvii

Data 8.49Internet Issues 8.49Electronic Commerce 8.50Computer and Information Technology Industry 8.51

Liabilities 8.52Infringement Risks 8.52Litigation 8.53

Industry-Specific Issues 8.54Franchise Industry 8.54Merchandising Industry 8.55Pharmaceutical Industry 8.55Biotechnology Industry 8.55Publishing Industry 8.55Entertainment Industry 8.56Sports Industry 8.56

Regulatory Issues 8.57Technology Transfer Restrictions 8.57Access to Information 8.58Privacy and Personal Information Issues 8.58Competition and Antitrust Issues 8.58Franchising Industry 8.59Pharmaceutical Industry 8.59

The Results of Due Diligence 8.60Interpretation 8.60Representations and Warranties 8.60

Definitions 8.61Title 8.62Validity and Enforceability 8.62Noninfringement 8.62

Opinions 8.62

Conclusion 8.64

Endnotes 8.64

CHAPTER 9INTELLECTUAL PROPERTY, DUE DILIGENCE, AND SECURITY INTERESTISSUES IN MERGERS AND ACQUISITIONS 9.1MELVIN SIMENSKY

VISITING SCHOLAR IN INTELLECTUAL PROPERTY LAW, NEW YORK LAW SCHOOL

WILLIAM M. HEBERER

HALL DICKLER KENT GOLDSTEIN & WOOD, LLP

Introduction 9.1

Understanding the Transaction 9.3Form of Transaction 9.3Parties to the Transaction 9.4

xviii CONTENTS

Due Diligence 9.4Defining the Intellectual Property Audit 9.5Components of an Intellectual Property Audit 9.5

Identify the Target's Intellectual Property Assets 9.5Confirm Ownership Rights 9.6Assess the Strength and Enforceability of Target's Rights 9.6Review Relevant Licenses and Agreements 9.6Analyze Potential Liabilities 9.7

Checklists for Specific Assets 9.8Copyrights 9.8Patents 9.9Trademarks 9.9Trade Secrets 9.11Domain Names and Websites 9.11

Representations and Warranties 9.12

Recording of Transfers 9.12Assignments 9.12Security Interests 9.13

Uniform Commercial Code: Article Nine 9.13Intellectual Property and Federal Preemption 9.14

Proposals for Reform 9.20

Endnotes 9.21

CHAPTER 10PATENT OPINIONS 10.1

DAVID A. LOEWENSTEIN

BROWN RAYSMAN MILLSTEIN FELDER & STEINER LLP

Introduction 10.1

Legal Framework 10.2Infringement 10.2

Claim Construction 10.2Literal Infringement 10.3The Doctrine of Equivalents 10.3Contributory and Induced Infringement 10.4

Validity 10.4

General Considerations Concerning Opinions 10.5Patents Give the Right to Exclude 10.5Applicable Legal Principles 10.6

Identify the Foundation and Scope of the Opinion 10.7Identify the Device or Process at Issue 10.7Identify the Possibility of Pending Patent Applications 10.7Identify the Intended Recipient 10.7Assessing an Opinion's Competence 10.8

CONTENTS xix

Clearance or Right to Use Opinions 10.9Reasons Not to Get Opinions 10.10

Opinions Used Against the Recipient 10.10Is Ignorance Bliss ? 10.10

Opinions on Applications 10.11Patentability Opinions 10.11Opinions on Technical Merit 10.12

Disqualification and Waiver 10.12Rule 3.7: The Lawyer-Witness Rule 10.12Are the Authors "Necessary Witnesses"? 10.13Scope of the Waiver/Disqualification 10.13

Endnotes 10.16

CHAPTER 11INTERNATIONAL MERGERS AND ACQUISITIONS:THE CANADIAN PERSPECTIVE 11.1FRANCOIS PAINCHAUD, LOUIS-PIERRE GRAVELLE, PANAGIOTA KOUTSOGIANNIS,

CHRISTIAN DANIS, AND MARIE-EVE COTE

LEGER ROBIC RICHARD

Introduction 11.1

Duality of the Canadian Legal Regime 11.1

Overview of the Transaction: Objective, Scope, and Costs 11.2Mergers, Competition Law, and Intellectual Property 11.3The Competition Bureau and Intellectual Property Enforcement Guidelines 11.4

Intellectual Property in Due Diligence Audits 11.6Patents 11.7

Co-ownership of Patents 11.8Assignment of Patents 11.10Research at the Patent Office 11.11

Trademarks 11.12Introduction 11.12Rights through Use 11.12Registration 11.12Application for Registration 11.12Term of Protection 11.13Limits on Trademark Enforcement 11.13Review of Marking in Association with Trademarks 11.13Assignment of Trademarks 11.14Research at the Trade-marks Office 11.14

Copyright 11.15Rights 11.15Term of Protection 11.15Registration 11.16

xx CONTENTS

Ownership 11.16Limits 11.17Due Diligence 11.17Assignment of Copyright 11.17Insolvency 11.17Moral Rights 11.18Research at the Copyright Office 11.18Marking in Association with Copyright 11.18

Trade Secrets 11.18Definition of Trade Secrets 11.18Enforcement of Trade Secret Rights 11.20Assignment of Trade Secrets 11.20Afatare q/7fo? flzgfo 11.21

Industrial Designs, Integrated Circuit Topographies, and PlantBreeders'Rights 11.21Other State-Granted Licenses 11.22Assets in Personnel 11.22

Impact of Employee-Employer Relationships 11.22

Licenses, Assignments, and Other Agreements Relating to IntellectualProperty 11.24

Licenses 11.24Assignments in an International Context 11.26

Security Interests in Intellectual Property 11.26Legislative Context 11.26Validity and Perfection of Security Interests 11.27Security Interest Searches and the Intellectual Property Registers 11.27Enforcement 11.29

Tax Considerations 11.29Eligible Capital Expenditures 11.29Depreciation of Intellectual Property Costs and Undepreciated CapitalCost(UCC) 11.30

Undepreciated Capital Cost 11.30Scientific Research and Development 11.31

Advantages under the Income Tax Act 11.31Deductions-Section 37ITA 11.32Investment Tax Credit—Section 127 ITA 11.32

Withholding Tax When Purchasing Intellectual Property Assets 11.32Non-Arm's Length Transfers 11.33

Tax-Free Transfers of Property to a Corporation 11.33Divisive Reorganizations 11.34Doing the Bump during Corporate Reorganizations 11.35Liability for Unpaid Tax 11.35

Endnotes 11.36

CONTENTS xxi

CHAPTER 12INTERNATIONAL MERGERS AND ACQUISITIONS: THE EUROPEANPERSPECTIVE 12.1BENEDICT BIRD, ANNA CARBONI, AND DEBORAH LINCOLN

LLNKLATERS & ALLIANCE

Introduction 12.1

Structure of the Transaction 12.1Private Acquisition of Shares 12.2Private Acquisition of Assets 12.2Private Acquisition of Part of a Business 12.2Public Offer 12.2Merger 12.2Demerger 12.2Joint Venture 12.3Scheme of Arrangement 12.3

Due Diligence 12.3Purpose and Method of Due Diligence 12.3Confidentiality and Privilege 12.4Registrable Rights 12.5

Patents 12.5Supplementary Protection Certificates 12.5Trademarks 12.6Designs 12.6Utility Models 12.8Plant Breeders'Rights 12.8

Identifying Registered Rights of the Target 12.8Investigating Registered Rights of the Target 12.8Unregistered Rights 12.10

Trademarks 12.10Copyright 12.10Moral Rights 12.10Database Rights 12.10Designs 12.11Semiconductor Topography Rights 12.12Confidential Information 12.12

Identifying Unregistered Rights of the Target 12.13Investigating Unregistered Rights of the Target 12.13

Trademarks 12.13Copyright 12.14Designs 12.14Database Rights 12.14Semiconductor Topography Rights 12.14Confidential Information 12.14

Identifying Contractual Rights 12.15Investigating Contractual Rights 12.15Dealing with Issues Arising from Due Diligence 12.16

xxii CONTENTS

Warranties and Indemnities 12.16Purpose of Warranties and Indemnities 12.16Factors to Take into Account 12.17

Which IPRsAre Likely to Be Relevant? 12.18Should the Warranties Be Limited to "Knowledge, Information,and Belief"? 12.18Do the Warranties Cover IPRs That Are Licensed to, as Well asOwned by, the Seller? 12.18Which Group Company Is Giving the Warranty? 12.18

Updating of Warranties 12.18Disclosure Letters 12.18

Transferring the Intellectual Property Rights 12.19Intellectual Property Rights Owned by the Target or a Company in Its Group 12.20

Assignment or License ? 12.20Formalities for Assigning Registered IPRs 12.21Formalities for Assigning Unregistered IPRs 12.21

Intellectual Property Licenses 12.22Stamp Duty and Other Taxes 12.23

The French Perspective 12.23Merger 12.23Demerger 12.24Confidentiality and Privilege 12.24Confidential Information 12.24Purpose of Warranties and Indemnities 12.24Transferring the Intellectual Property Rights 12.24

The Universal Transmission Principle 12.24Fo rmalities Required 12.25Transferring Intellectual Property Owned or Licensed by the Targetor a Company in Its Group 12.25Formalities for Assigning Registered IPRs 12.25Formalities for Assigning Unregistered IP Rights 12.25Intellectual Property Licenses 12.25Stamp Duty and VAT 12.26

i, The German Perspective 12.26Structure of the Transaction. 12.26Due Diligence 12.27Intellectual Property (Commercial Protection Law and Copyright Laws) 12.27

Patents 12.28Supplementary Protection Certificates (Ergdnzende Schutzzertifikate) 12.29Utility Models (Gebrauchsmuster) 12.29Semiconductor Topography Rights (Halbleiterschutzrechte) 12.29Plant Breeders' Rights (Sortenschutzrechte) 12.30Trademarks (Marken) 12.31Registered Design Rights (Geschmacksmuster) 12.31Copyright (Urheberrecht) 12.31

CONTENTS

Secret and Nonsecret Know-How (Geheimes und Nicht-GeheimesKnow-How)

Warranties and IndemnitiesTransfer

Competition LawRelevance to Corporate TransactionsThe EC Competition RulesAssessing Market PowerArticle 81

Agreements Having as Their Object or Effect the Prevention,Restriction, or Distortion of CompetitionAppreciabilityExemptionModernization of EC Competition RulesLicenses of IPRsPatent and Know-How LicensesLicenses of IPRs Other Than Patents and Know-HowResearch and Development AgreementsGuidelines on Horizontal Cooperation AgreementsThe Sale Agreement

Article 82The ECMR

Appendix 1

Endnotes

xxiii

12.3112.3212.32

12.3312.3312.3312.3312.34

12.3512.3612.3612.3712.3712.3812.3912.3912.4012.4112.4112.44

12.45

12.47

CHAPTER 13INTELLECTUAL PROPERTY TRANSFERS—HOLDING COMPANIES 13.1SUSAN BARBIERI MONTGOMERY AND LEONARD SCHNEIDMAN

FOLEY HOAG & ELIOT, LLP

Introduction 13.1

Formation of the Holding Company 13.2Contribution of Intellectual Property Rights 13.2

Domestic Transfer of Intellectual Property Rights 13.2Offshore Transfers of Intellectual Property Rights 13.3

Business Purpose 13.3

Use of a Domestic Holding Company 13.4Delaware Investment Holding Companies 13.4

Attacks on Delaware Investment Holding Companies 13.5

Use of a Foreign Holding Company 13.7Offshore Intellectual Property Rights Licensed to a Related UnitedStates Licensee 13.7

Deducibility of License Royalties 13.7Royalty Rate 13.7The "Superroyalty" Provision 13.8

xxiv CONTENTS

Withholding for U.S. Tax 13.8Internal Revenue Service Enforcement 13.8

The Effect of Tax Treaties 13.8Withholding Rates 13.8

Cascading Royalties 13.9Limitations on Treaty Benefits 13.9Anti-Conduit Regulations 13.10

Foreign Holding Company Licensing to Its Foreign Affiliates 13.10

Endnotes 13.10

CHAPTER 14OFFSHORE CORPORATIONS 14.1TIRA GREENE

CONSULTANT

ANGUILLA

MICHAEL J. WARD

COUNSEL LIMITED

ANGUILLA

Introduction 14.1

Offshore Jurisdictions 14.1

Holding Company or Active Business? 14.2

When to Go-Before the Intellectual Property Exists 14.2

When to Go-Early in the Development Cycle 14.3

Transaction Types 14.4

Which Vehicle to Use 14.6

Conclusion 14.8

Endnotes 14.8

CHAPTER 15ACQUISITION AND LICENSING OF FAMOUS NAME TRADEMARKSAND RIGHTS OF PUBLICITY IN THE UNITED STATES 15.1THEODORE C. M A X

PHILLIPS NIZER BENJAMIN KRIM & BALLON, LLP

Introduction 15.1

Fair Use Defense: "A Rose By Any Other Name . . . " 15.4

Right of Publicity: What's in a Persona 15.5The Name Must Be Identifiable and Known to Be Protected 15.5A Person's Persona Also May Be Identified by a Photograph or Likeness 15.5Voice and Sound Are Now Protectable under the Right of Publicity 15.6

CONTENTS

State and Common Laws Govern the Right to Publicity in the United StatesPostmortem Rights of PublicitySeventeen States Recognize Common Law Rights of Publicity

AlabamaCaliforniaConnecticutFloridaGeorgiaHawaiiIllinoisKentuckyLouisianaMinnesotaNew JerseyOhioOklahomaPennsylvaniaTennesseeTexasUtahWisconsin

Federal Protection of the Right of Publicity under the LanhamAct § 43(a): Implied Endorsement

Defenses to Right of Publicity ClaimsFirst AmendmentParodyStatutes of Limitation

Transactions Involving Famous Name Trademarks and the Rightof Publicity: Assignment and Licenses

Endnotes

XXV

15.615.615.715.715.715.715.715.715.715.815.815.815.815.815.915.915.915.915.915.9

15.10

15.10

15.1015.1015.1015.10

15.11

15.16

CHAPTER 16TRANSFER OF INTELLECTUAL PROPERTY UPON MERGER OR ACQUISITION 16.1LANNING G. BRYER AND SCOTT J. LEBSON

LAD AS & PARRY

Introduction 16.1

Means of Acquiring Intangible Assets 16.3Mergers 16.3Purchase Agreement 16.3Supplemental Closing Documentation 16.4Sale of Assets 16.4Stock Purchase 16.4

Tax Considerations 16.5

xxvi CONTENTS

Antitrust 16.5Patents 16.7Copyrights 16.7Trademarks 16.7Grant-backs 16.7Competition Law in the European Community 16.8

Worldwide Recordal of Intellectual Property Rights 16.9Separate Documents for Each Jurisdiction Are Required 16.10Costs 16.11

Transfer of Trademarks 16.11Assignment 16.11Intent-to-Use Trademarks 16.12The Paris Convention 16.12Goodwill under the Community Trademark System 16.12Goodwill under the Madrid Agreement and Protocol 16.12Recordal of Trademark Assignments in the United States 16.13Benelux 16.13The Community Trademark 16.14Madrid Agreement and Madrid Protocol 16.14Other Multilateral Treaties 16.15

Worldwide Patent Assignment Recordal 16.15

Transfer of Patents in the United States 16.15

Transfer of Trade Secrets in the United States 16.16

Worldwide Copyright Assignment Recordal 16.16

Transfer of Copyrights in the United States 16.16

Transfer of Domain Names 16.18

Conclusion 16.19

Endnotes 16.19

INDEX I.I