Dr. Keegan Caldwell is the founder and global managing partner of Caldwell.
When it comes to exit strategies, unresolved IP infringement issues can transform a promising deal into a costly nightmare. The multi-year Moderna vs. Pfizer and BioNTech dispute over mRNA vaccine technology is a strong example and has been creating complications for all three parties’ strategic positioning and valuations. In fact, in a win for Moderna this past May, the European Patent Office upheld the validity of one of the company’s key patents—a move which saw Moderna’s U.S. stock price increase by 0.52% at the time, while shares of Pfizer and BioNTech dropped 1.14% and 0.67%, respectively.
While such disputes are never ideal, they can prove particularly challenging for companies eyeing an exit. IP infringement risks can fundamentally impact deal valuations, timelines and post-closing liability. Over the past two years, 30% of major M&A deals have faced significant delays—a figure that has increased from 15% in 2020. And from my observations, many of these delays are due to IP-related issues discovered during due diligence.
In private company transactions, representations about IP ownership and infringement typically survive for 12-18 months post closing, with some deals extending this period up to five years—and for public companies, there is no survival period. This extended liability window means that unidentified IP risks can come back to haunt sellers long after the deal closes, highlighting the importance of thorough pre-exit risk management.
Proactive IP Due Diligence
In my experience, the foundation of effective IP risk management lies in comprehensive due diligence. One method my firm and many others have found to be effective is a thorough IP landscape analysis. This process involves mapping your technology against existing patents, identifying potential infringement risks and understanding your competitive position. I’ve found that companies that implement regular IP landscape reviews are more likely to successfully navigate due diligence during exit processes, largely because they can address potential issues before they become deal-breaking problems.
Freedom to operate (FTO) studies can serve as another component of proactive risk management. These detailed analyses examine whether your products or services might infringe on existing patents in your target markets. Conducting FTO studies can be expensive, potentially costing thousands of dollars, depending on complexities such as jurisdiction, technology and scope. However, they’re typically more cost-effective than defending against infringement claims, which can cost an average of $3.5 million per patent litigated.
A third method you can add to your risk management strategy is to implement a robust patent monitoring system. By tracking new patent filings, grants and litigation in your technology space, you can identify potential risks early and adjust your strategy. Modern AI-powered monitoring tools have made this process even more efficient and comprehensive, allowing companies to track thousands of patents and applications across multiple jurisdictions with increased accuracy in identifying relevant threats.
Strategic Risk Management Approaches
Strategic IP risk management demands an active approach to portfolio design and licensing. Structure your IP portfolios to create strategic barriers around core technologies while maintaining flexibility through licensing options. This approach can be particularly effective in high-stakes industries, as demonstrated by the Apple-Qualcomm dispute resolution in 2019, where a comprehensive licensing agreement not only helped end years of litigation but also positioned both companies for stronger market performance—Apple’s stock increased 2% and Qualcomm leapt up over 38% following the settlement.
Patent pools and cross-licensing arrangements can offer additional risk mitigation strategies. By participating in these collaborative frameworks, companies can reduce their exposure to infringement claims while maintaining access to important technologies. For example, when multiple patent holders threatened to stall the adoption of MPEG-2 digital video compression technology in the 1990s, a strategic patent pool consolidated hundreds of essential patents (automatic download) from dozens of companies across multiple countries. This consolidation allowed companies to license required patents in one transaction and led to widespread MPEG-2 adoption.
Similarly, the One-Blue patent pool was developed to consolidate the patents required to manufacture Blu-ray players and discs, pacifying major players like Sony, Panasonic and Cyberlink. Such arrangements can be particularly attractive to potential acquirers or investors, as they demonstrate both market cooperation and reduced legal risk.
Building Defensive IP Positions
Creating a strong defensive IP position begins with strategic patent acquisition. Focus on building portfolios that not only protect your company’s innovations but also provide leverage in potential disputes.
Targeting white space—areas with limited existing patent coverage—represents another important defensive strategy. By conducting thorough prior art searches and focusing R&D efforts on less crowded technological areas, you can reduce your infringement risk while building valuable IP assets. I’ve found this approach particularly effective in emerging technologies, where early movers who carefully navigate existing IP landscapes can secure strong positions with minimal infringement exposure.
Of course, documentation practices also play an important role in defending against infringement claims. In my experience, companies that maintain detailed records of their independent development processes are more likely to successfully defend against infringement allegations. This includes maintaining comprehensive lab notebooks, development timelines and design documentation—particularly important during due diligence phases of exit processes, where potential buyers or investors will scrutinize innovation origins and development paths.
Looking Ahead
Managing IP infringement risks is important for preserving a company’s future opportunities. As IP continues to account for 90% of enterprise value among S&P 500 companies, the stakes for proper risk management have never been higher. By implementing comprehensive risk management strategies—from robust due diligence to strategic defensive positioning—while building a robust IP portfolio, you can greatly increase your likelihood of achieving a smoother exit and higher valuation.
I expect the future of IP risk management to grow even more complex as technology convergence accelerates and innovation cycles shorten. However, this challenge also presents an opportunity. Organizations that develop sophisticated approaches to IP risk management today can protect their exit potential and create significant competitive advantages in 2026 and beyond. The key is starting early and maintaining consistent focus on risk management throughout your company’s growth journey.
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