Prior Agreements May Limit IP Rights in M&A Transactions

December 26, 2014 by wilsonneelynyc

In the field of M&A law, intellectual property often takes center stage in a wide variety of transactions. In many cases, the IP rights of a target acquisition may be restricted by prior agreements, which limit their use in select markets or industries. Targets may also be involved in existing licensing agreements that grant a third party organization exclusive use of IP in a field of use. As such, the prospective buyer may not enjoy full and unrestricted use of the target’s IP rights.


Over the years, licensors of IP have argued that licensees do not qualify as separate corporate entities during specific mergers, which can void the terms of a licensing agreement. If the government grants funding to an entity such as a university or nonprofit organization, it may be able to retain rights to patents developed using that funding. Additionally, the government will enjoy the right to license the resulting invention to third parties.

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