Research On The Legal Issues In Cross-border M&A Of Intellectual Property

With the arrival of the knowledge economy era,the transformation from the fast development of economic globalization to the rise of unilateral protectionism,and the economic globalization process struggled,the acquisition and use of intellectual property in corporate merger and acquisition(M&A)are growing to be more complicated because of the changing rules and layouts in international investments.Along with the increase of cross-border M&A of intellectual property,it is unavoidably related to the legal issues with due diligence,value assessment,transfer and others of intellectual property.As a result,it is of great significance to study the relationship between intellectual property and cross-border M&A as well as other relevant legal issues.This thesis centers around the intellectual property in M&A,which is taken as achieving balance between the legitimacy policy objectives of cross-border M&A investment and the public policy of intellectual property.It focuses on the analysis of the legal responsibility of intellectual property due diligence in M&A,the legal factors in intellectual property's value assessment,the anti-monopoly regulation on intellectual property in M&A,and the national security review of the cross-border M&A.From an interdisciplinary perspective,this article uses economics and law related theories to carry out theoretical demonstrations and empirical considerations on the legal issues regarding intellectual property in M&A.The ultimate goal is to provide useful guidance for domestic enterprises and government agents on how to deal with foreign M&A with the purpose of obtaining intellectual property.Clarifying the basic principles and main legal issues in cross-border M&A of intellectual property is the logical starting point and analysis premise of the thesis.Firstly,on the basis of defining the concept of cross-border M&A of intellectual property,this thesis summarizes the unique features of it.Secondly,through illustrating the intangible,incomplete specificity and incentive elaboration of intellectual property,this thesis analyzes the economical specifics for including intellectual property in investments.By discussing the possibility for evaluating and for transferring the intellectual property,it analyzes the qualifications for intellectual property capital.Thirdly,based on the general theoretical analysis of Dun Ning's"Eclectic Paradigm Theory of International Production" and the empirical analysis of the impact of intellectual property in M&A investment practices,this thesis explores the impact of acquiring intellectual property on making decisions in M&A investment.Fourthly,this thesis discusses the legal issues to be resolved in cross-border M&A of intellectual property.It focuses on the cross-border M&A of intellectual property,which is to achieve a balance between the legitimate goals of cross-border M&A investment regulations and the incentive mechanisms for intellectual property.On the basis of the existing literatures,the thesis summarizes the legal issues in each stage of cross-border M&A of intellectual property as the followings four aspects:the legal responsibility allocation in the due diligence for intellectual property,the legal factors in intellectual property value assessment,and the anti-monopoly regulations on cross-border M&A of intellectual property,and the national security review of cross-border M&A of intellectual property.The due diligence of intellectual property shall not only consider "what is"intellectual property,but also include the potential expansion of intellectual property within its jurisdiction,which is"what it can do".It shall Identify whether the target has related intellectual property,whether the intellectual property is involved in litigations or the threats of involving in litigations,the validity of intellectual property,the transferability of licensed intellectual property,and whether the intellectual property is mortgaged or otherwise hindered,so as to reduce potential risks in M&A and determine the appropriate M&A price with this foundation.The parties failing to perform duties in the due diligence of intellectual property will lead to legal liabilities in the aspects of contracts,company laws,and intellectual property rules.The specific matters could relate to the defect guarantee of the target's intellectual property,the liability for breaching the obligation to notify important matters,the liability of the merger party in breach of confidentiality agreements,and the contractual or tortious liability of lawyers and other agencies in due diligence.The responsibilities of relevant parties shall be clarified to ensure that the investigation of intellectual property is conducted diligently and prudently.Intellectual property assets are evaluable.Assessment is an important means to understand the value of the target's intellectual property.Scientific valuation can provide a basis for decision-making in M&A bids.The characteristics of intellectual property determine the uniqueness of its evaluation method selection.The value of intellectual property is affected by legal factors,which is different from other assets.This part of the thesis first analyzes that the value assessment of intellectual property meets the actual needs of enterprises in many fields,such as strategic development,transaction pricing,tax design,financing and legal litigation,exploring the necessity of intellectual property value assessment.Secondly,it analyzes the traditional value assessing methods,combining with the specific conditions of intellectual property assets,to figure out the assessment methods for cross-border M&A of intellectual property.Finally,with the specific circumstances of M&A,this part finds the considerations on legal factors that affect the assessment of different types of intellectual property.Besides,it pays attention to the timeliness,pertinence and reference of value assessment in cross-border M&A.The object assessed is limited to the intellectual property of the target party in this M&A.The assessment is conducted for this cross-border M&A.But the assessment serves as a reference rather than a decisive factor.The assessed value of intellectual property is not equal to the transaction price.The anti-monopoly review and regulation have become an important determinant of whether major cross-border M&A can be carried out.The intersection of intellectual property protection and anti-monopoly is historical and realistic.Identifying monopolistic behaviors in cross-border M&A of intellectual property,analyzing the benefits of anti-monopoly regulations on cross-border M&A of intellectual property based on the principle of relative interest balance,and exploring how to regulate and remedy the abuse of patents,copyrights and trademarks are major factors.In addition,the cross-border M&A of intellectual property is also significant for the survival of enterprises and national security.Specifically,M&A intended to obtain patents may cause technological dangers,copyright-based M&A may threaten cultural security,and M&A closely related to trademarks and brands may influence industrial security.To analyze and deal with national security issues caused by intellectual property monopoly and transfer in cross-border M&A,it is necessary to balance the M&A investment objective of the acquirer to maximize economic benefits and the host country's need to use foreign capital and maintain national security interests,strengthening national security reviews.The ultimate goal is to promote the sound development of cross-border intellectual property M&A in the balance of relative interests.The cross-border M&A of Intellectual property not only is relevant to the acquisition of intellectual property by corporations,but also is vital to the nation's general intellectual property strategic planning.It is a complex economic and legal activity.From "bringing in" to "going global",China has completed the strategic shift to value attracting foreign investment and investing overseas equally.The M&A investment has become an important investment method for Chinese companies to"go global",in which the acquisition of intellectual property has become an important driving force for Chinese companies to participate in cross-border M&A.However,some developed countries have resorted to investment protection in the name of anti-monopoly and national security review,making it difficult for Chinese enterprises to conduct cross-border M&A of intellectual property.In addition,in the process of"bringing in",foreign investors who come to invest in China may take use of the market advantages formed in M&A to disrupt orderly market competition.They could also utilize M&A to obtain scarce intellectual property resources from Chinese enterprises,raising domestic intellectual property security issues.China needs to build a firewall for the anti-monopoly and national security review in cross-border M&A of intellectual property.Furthermore,china needs to improve its ability to”go global”in the innovation-driven process,improving the level of "bringing in" while enhancing its regulations,actively participating in a new round of restructuring of the investment rules,and promoting China's influence in the restructuring of international trade and investment rules.