Hidden risks in mergers and acquisitions: If intellectual property records are not updated, the consequences may be beyond your imagination

As global corporate mergers and acquisitions become more frequent, intellectual property, as a core component of intangible assets, is increasingly becoming a key bargaining chip in M&A transactions. However, while many companies focus on transaction terms and valuation games, they often overlook an operation that seems technical but has a substantial impact - the timely updating of intellectual property records.

In this issue, Beijing Yezhima has specially compiled a practical list of intellectual property management in mergers and acquisitions to help companies efficiently promote ownership transfer, avoid risks, and release asset value.

Why is it important to update intellectual property records promptly after a merger?

• When acquiring or merging a company, all IP records involved must be updated in a timely manner to reflect the new owner. Failure to accurately indicate the actual rights holder of IP assets may not only weaken the legal protection of assets such as patents and trademarks, but may also have a chain reaction impact on licensing agreements, technology transfers, and rights protection lawsuits.

Three steps to intellectual property management in mergers and acquisitions

• Budget setting: This may seem like a detail, but it is actually the starting point for overall cost control. Be sure to sort out the legal requirements and time limits of each country/region where each asset is located in advance to have a clear idea of them.
  • The cost of updating IP records cannot be underestimated, especially for large companies with a large international presence. It is recommended to include the following items in your budget:
    • Official fees: Individual items may seem cheap, but the cost becomes significant when the number of items is accumulated.
    • Agency fees/internal labor costs: Should we entrust an external service provider or use an internal legal team? We need to make a trade-off between efficiency and cost.
    • Translation and certification costs: When it comes to IP assets in multiple languages and countries, translation and document certification are often "hidden big items"
    • Late payment fines: Intellectual property offices in various countries have clear time limits for record changes. Delays may trigger incremental late payment fees.
• Identify responsible parties: After determining the budget, the company needs to decide who will execute the changes to the IP records. The key judgment criteria is: are you willing to spend money to buy time, or spend time to take risks? In high-value transactions, one wrong step may miss everything.
  • Internal team processing: The cost is controllable, but the cycle may be longer and there may be interference from other tasks
  • Entrust external institutions: The cost is higher, but it is more professional, more efficient, and can avoid overdue risks
• Develop an update plan: For M&A projects involving multiple countries and multiple assets, it is recommended to give priority to centralized management to minimize potential legal and business risks.
  • Synchronous processing of nodes such as renewal: Although scattered processing seems to save energy, it is inefficient and easy to miss in the long run
  • One-time centralized processing: Although the initial workload is large, it can unify information, quickly clear mines, and clearly track.

Changes in IP ownership cannot wait, cannot be slow, and cannot be made incorrectly. Failure to complete IP transfer in a timely manner must not lead to serious consequences such as the invalidation of the license agreement, loss of subsequent litigation, and inability to properly record technical assets.