We recently had dinner with a friend of ours who manages a large fund for investment in Chinese technology companies. His fund is very optimistic about the Chinese tech industry and its ability to innovate new products. However, he said that the many of their prospective deals fail to close or close at much lower valuations because of problems revealed during the IP due diligence process. This is unfortunate because these IP problems could probably have been avoided if the company had focused earlier on creating an IP Management System at the international standard.
When an investor conducts IP due diligence, it generally focuses on three critical questions regarding the tech company's business:
- Does the company have its own IPs?
- Does the company's IP adequately protect its technology / products from copying?
Does the company's technology / products infringe any third party IP?