Originally published in The National Law Journal, May 15, 2000
After a recent multi-million dollar acquisition, a large technology company was shocked to learn that the patents lying at the heart of the deal were virtually worthless. Everything had looked OK. The patents contained drawings and text describing a product that the acquiring company wanted to make. But as the company soon learned, the claims in the patents were not broad enough to keep competitors at bay. Even worse, an after-the-fact investigation revealed that one competitor held a blocking patent, preventing the acquiring company from making the desired product at all.
How could this happen? The acquiring company thought it had engaged in the necessary due diligence. But how much diligence is due? The answers could lie in the methodology of the acquiring company’s due-diligence analysis. Every due-diligence inquiry is unique, requiring an individualized approach. When a company tailors the inquiry to the
