IP Representations and Warranties in Stock Purchase Agreements
(Pro-Buyer, Long Form)
Summary
This form is an Intellectual Property (IP) Representations and Warranties in Stock Purchase Agreements drafted from the buyer's perspective. Stock purchase arrangements involve the sale of a controlling interest in the seller's company rather than specific business assets. This template includes practical guidance and drafting notes. The buyer steps into the shoes of the seller by taking full control of the company and assumes responsibility over all of the entity's assets and liabilities. A buyer should therefore require the seller to make specific disclosures and provide assurances regarding the validity, ownership, and protection of the IP and all related rights owned by the company. For a more detailed discussion on IP representations and warranties, see IP Asset Acquisitions — IP Representations & Warranties. While IP representations and warranties can vary depending on unique factors (e.g., the nature of the IP involved, regulatory obligations, and industry best practices), you should consider the following issues when drafting IP representations and warranties: • Right to use. The company currently owns the IP or has the exclusive right to use the IP. • IP inventory. The seller has provided a complete list of all of the company's existing IP, including registrations and pending applications owned by or licensed to the company, used or reasonably contemplated to be used in its business. • Maintenance of IP rights. The company has properly registered all of its IP and taken all other steps required by applicable law to perfect its rights in the IP. • Identify licenses. The company has provided a complete list of all license agreements relating to the IP, whether as a licensor or a licensee. • IP infringement. Neither the company nor any of its products or services has infringed on the IP rights of any third party. There is no pending or threatened lawsuit, claim, action, or investigation alleging any violation of another party's IP rights. There is no pending or threatened opposition to any IP registrations or applications. In addition, no third party, or any third-party product or service, is infringing on the IP rights of the company. • Enforcement of IP rights. The company has appropriately sought, maintained, and enforced its rights against third parties. • No encumbrances. Entering into the agreement will not conflict with or give rise to any right, license, or encumbrance relating to any IP owned or used by the company. • Confidentiality. The company has taken reasonable measures to maintain the confidentiality of its IP where applicable. • Internal assignments. All of the company's key employees have assigned or otherwise exclusively transferred all of their rights in the IP. The template provides a starting point for drafting IP representations and warranties clauses for a stock purchase agreement and should be tailored for the specific facts and circumstances of the proposed arrangement. This template does not address representations and warranties regarding: • The transfer of software or any specific technology • Compliance with obligations required by any relevant law, regulation, or rule • Privacy and data security activities and obligations • Standards or rules required by any industry or trade organization to which the parties are members