Intellectual Property – Due Diligence
Revolutionary technology, or an insignificant advance in a sophisticated field?
Company B has just bid for a large contract to develop a guidance system for unmanned aircraft and seeks an equity investment to help fund the growth. Company B believes the "revolutionary" flight control and navigation technology is novel and extremely well protected, but how can an investor validate the claim in this sophisticated field of technology?
Despite the issuance of more than 980 patents in this area, only four prior patents slightly overlap Company B's patent. This low incidence of overlap signifies that Company B's technology is readily distinguished from others in a fairly crowded field. This supports Company B's claim that its technology is revolutionary. Among the holders of the four similar technology patents is Boeing, which has been collaborating with Company B, suggesting Boeing believes that the company's technology is different – and potentially better – than its own.
Of the patents that were filed after Company B's patent was issued, and which strongly overlap it, three are important players in the aerospace market. Company B may be able to block their use of potentially infringing technologies. The fourth overlapping patent presents a potential licensing opportunity, and, more importantly, it is a patent being used in a non-aerospace market. The IP Assessment identified a potential new vertical market in which Company B might be able to exploit its patented technology.