HOW TO CONDUCT IP DUE DILIGENCE FOR LIFE SCIENCES AND ADVANCED MATERIALS COMPANIES
In the fast-evolving world of life sciences, chemicals, and advanced materials, intellectual property (IP) isn’t just a legal checkbox; it’s the foundation of valuation, funding, and competitive advantage. For growing companies and investors evaluating acquisitions or scaling R&D, robust IP due diligence can spell the difference between a successful deal and a costly misstep.
At Hylton Rodic Law, our clients include growing life sciences and specialty chemical companies that are expanding R&D pipelines, acquiring product lines, or preparing for strategic investment. We help these companies navigate IP due diligence with clarity, rigor, and commercial insight. Below is a practical roadmap for approaching IP due diligence strategically, not reactively.
1. Map the Existing IP Landscape
Start with a comprehensive map of all intellectual property assets the company owns, controls, or relies upon. This includes:
Patents and patent applications (with jurisdictions, filing status, and expiration dates)
Trade secrets and proprietary know-how
Trademarks, copyrights, algorithms, and data sets
Software code, lab notebooks, and regulatory data exclusivity
Request detailed inventories of:
Patent families and jurisdictions
Trade secret summaries (and their internal protection mechanisms)
License agreements — both inbound (rights to use others’ IP) and outbound (rights granted to others)
IP rights mapping to current and future product pipelines
This early-stage audit forms the foundation for assessing IP strength, ownership, and commercial viability.
2. Verify Ownership and Chain of Title
A patent is only as strong as its ownership record. Unclear or incomplete assignment chains can derail acquisitions, licensing deals, and enforcement actions.
Confirm for every IP asset:
Proper inventorship and assignments
Executed transfers of rights to the company
Any third-party obligations, including milestone or royalty payments
Clear ownership is the first step; the next is determining whether those rights are broad, enforceable, and unencumbered.
3. Evaluate Scope, Validity, and Freedom to Operate (FTO)
The question isn’t just what patents exist, but how strong and defensible they are. Key analyses include:
Scope: Are the claims broad enough to protect core innovations?
Validity: Are there risks from prior art, oppositions, or re-examinations?
Freedom to Operate (FTO): Can your company commercialize its technology without infringing third-party patents?
For biotech, chemical, and materials companies, FTO is often make-or-break. A single unaddressed blocking patent can halt R&D or delay market entry.
4. Review Agreements, Licenses, and Third-Party Obligations
Most life sciences and advanced materials companies operate within complex R&D ecosystems — universities, CROs, joint ventures, or public funding arrangements. Every agreement can impact IP rights and obligations.
Conduct a full review of:
Licensing agreements – check exclusivity, field-of-use limits, sublicensing rights, royalties, and termination clauses.
Collaboration, co-development, and material transfer agreements (MTAs) – determine ownership of inventions, data use, and publication controls.
Government or funding agreements – confirm compliance with Bayh-Dole or similar frameworks that can affect IP title.
The goal is to ensure your IP position is clean, compliant, and commercially flexible.
5. Assess IP Management, Strategy, and Organizational Readiness
Beyond the patents themselves, investors and acquirers must evaluate how well IP is managed internally.
Ask:
Does the company have formal invention disclosure and trade-secret protection policies?
Are patent renewals and competitor monitoring handled systematically?
Is IP filing aligned with the business pipeline and regulatory exclusivity timelines?
Are there key inventors or team members critical to IP continuity?
An organized, forward-looking IP strategy signals operational maturity — something every investor values.
6. Identify and Quantify IP Risks
A comprehensive risk assessment identifies where vulnerabilities may exist:
Expiring or weak patents
Unclear ownership or licensing gaps
FTO exposure
Trade secret leakage or insufficient internal controls
Overreliance on third-party technology
Each identified risk should be paired with a mitigation strategy — from filing continuations to renegotiating licenses or strengthening trade-secret protocols. Done well, this transforms IP due diligence from a compliance task into a value-building exercise.
7. Deliver Findings and Maintain Continuous Monitoring
A strong IP diligence report should do more than summarize — it should prioritize. Provide:
Risk-graded findings
Actionable recommendations (e.g., file continuations, restructure agreements, enhance confidentiality practices)
Forward monitoring plans to track expirations, competitor filings, and regulatory exclusivity shifts
IP diligence is not a one-time event. Ongoing monitoring ensures your portfolio evolves in step with your company’s R&D, partnerships, and strategic pivots.
For investors, weak or incomplete IP diligence can mask hidden liabilities, erode valuation, or stall acquisitions.
For companies, a strong IP diligence framework:
Builds credibility with funders and strategic partners
Strengthens negotiation positions during M&A or licensing
Creates long-term resilience against competitive and regulatory risks
Unlike traditional law firms, Hylton Rodic Law integrates technical, regulatory, and commercial analysis to help you make sound IP decisions during growth, investment, or acquisition. We help growth-stage innovators translate IP data into business intelligence — aligning legal protection with strategic value.
Before your next funding round, acquisition, or licensing negotiation, ensure your IP portfolio can withstand investor scrutiny — and deliver competitive advantage.
Schedule a consultation with Hylton Rodic Law to ensure your IP assets are structured, protected, and positioned for growth.
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