BVWire—UK notes a 15 February decision by Judge Richard Hacon of the High Court that denied a claim by an ex-employee against the digital forensics company MDS Ltd for copyright. The new decision offers fairly large protections against such claims for IP developed during a term of employment—reducing but not eliminating this risk.

Most business valuation engagements require assessment of IP and technology—as operating assets, capital investment, and because of additional intangible benefits and risks.

Some of the key risks are included in the Lexology book Getting the Deal Through, written by White & Case lawyers Deborah Lincoln, Dr. Philip Trillmich, Lindsey Canning, and Tom Matthews (their book also offers extensive guidance on tech due diligence and transfer challenges when selling these assets).

Among the issues business valuers should consider when assessing technology in small and medium enterprises, the authors highlight:

• Identifying any registered IP rights and applications for registration;
• Verifying that a member of the target group is the registered proprietor or applicant;
• Confirming whether there have been, or are, any challenges to the validity or ownership of these IP rights;
• Identifying any defects in their chain of title that could pose future risk;
• Reviewing the terms of any licences of intellectual property granted to, or by, the company and assessing whether they’re transferrable and whether they create operational restrictions or barriers to growth;
• ‘Reviewing the target group’s agreements with past or present employees, contractors and consultants to assess whether a member of the target group owns all rights in inventions and other works created by them and has imposed appropriate confidentiality obligations on them’ (similar to the exposure highlighted in the MDS case);
• Assessing the SME’s use of open source software;
• Determining whether the organisation has an appropriate enforcement policy to protect their IP, often based on how they responded to previous IP claims, if any; and
• ‘Reviewing agreements relating to the material IT systems used by the target group, including licences, support and maintenance agreements and outsourcing contracts.’