As a business owner looking to prepare your business for an eventual sale, and maximize its valuation, there are a number of relevant intellectual property law issues to consider before and during the sale/purchase process. Here are three of the most important.

Ownership
There can be substantial value in your company's intellectual property, but only if your company actually owns, or has valid licenses to use, all intellectual property that is used in its business. Never assume you own your IP, properly confirm it by: (i) reviewing all intellectual property agreements (such as assignments, license agreements and prior sale and purchase documents) with third parties that show you have been granted ownership or at a minimum the right to the third party intellectual property; and (ii) by confirming that all of your employees and contractors (who have or will create some or all of the relevant intellectual property) have proper written employment agreements and/or agreements assigning ownership of all intellectual property and technology they develop. Without these agreements, ownership of inventions (whether or not patentable) may initially belong to the inventor and not the company.

Intellectual property agreements
Review your intellectual property agreements carefully. For in-licensing agreements (where your company receives a license to use third party intellectual property), a buyer will want to confirm that the
scope of the license is broad enough to cover all current and anticipated future uses of the licensed intellectual property (including the right to make and own modifications and derivative works, if applicable). Also, consider and assess grants of exclusive rights, including an exclusive license to use intellectual property for a particular field of use or the appointment of an exclusive distributor or reseller in a specific territory or market. Potential buyers may already have their own established distribution networks and the exclusive rights you would grant as part of the sale may cause channel or development issues and/or de-value the intellectual property assets in the eyes of a buyer. And, importantly, check your in-licenses to make sure you have the right to assign the rights and obligations to any buyer, so the agreements can continue after the sale of the business is completed.

Review your out-licensing agreements (where a license is granted to a third party customer or partner to use your company's intellectual property), to make sure the scope of the license is appropriate and that only those rights needed by the licensee are granted and not more. If you have indemnification provisions, check them carefully. Buyers will be very interested to make sure that any indemnity rights granted to third parties are limited by appropriate limitation of liability provisions (such as appropriate damage caps).

Registered intellectual property
Examine all materials related to your registered intellectual property, including patents and applications for patent, trademarks and trademark applications, copyright (registered and unregistered), and any Internet domain names. A prospective purchaser will want to confirm that your company is properly registered as the owner of record for all such items and that all required filings are current and up to date to maintain the registrations in good standing.

For a seller looking to obtain or maintain the highest valuation, the above-noted intellectual property issues must be carefully considered.