IP License M&A Workaround

Extracted Attributes

• Key Components

  Intellectual Property (IP) licensing and talent acquisition (acqui-hiring)

• Primary Industry

  Technology

• Primary Objective

  Circumventing antitrust regulations and avoiding lengthy regulatory review cycles

• Regulators Involved

  Federal Trade Commission (FTC) and Competition and Markets Authority (CMA)

Timeline

• NVIDIA's acquisition of Arm is blocked by regulators, serving as a catalyst for seeking alternative deal structures. (Source: Web Search Result 4)

  2016-01-01

• Google utilizes an early version of the workaround by hiring HTC's engineering team and licensing its IP rather than acquiring the company. (Source: Web Search Result 4)

  2017-09-21

• Microsoft executes a licensing deal with Inflection and hires the majority of its staff, including the founders. (Source: Web Search Result 4)

  2024-03-19

• Amazon follows the workaround model with Adept, bringing in the founders and key team members alongside a licensing agreement. (Source: Web Search Result 4)

  2024-06-28

• Meta takes a 49% stake in Scale AI and hires its CEO to lead superintelligence efforts while keeping the company independent. (Source: Web Search Result 4)

  2024-08-01

• The All-In Podcast predicts the IP License M&A Workaround will be a dominant trend in deal-making to bypass antitrust hurdles. (Source: Document 5bce0809-68e1-42ae-bd57-caef72a9db47)

  2026-01-01

Free license

A free license or open license is a license that allows copyrighted work to be reused, modified, and redistributed. These uses are normally prohibited by copyright, patent or other Intellectual property (IP) laws. The term broadly covers free content licenses and open-source licenses, also known as free software licenses.

Web Search Results

• [PDF] Intellectual Property: Asset Purchases - Fried Frank

   „ The buyer in turn may seek more expansive rights, including the right for the buyer to use the IP outside of the purchased business or for scope of the license to cover growth of the purchased business. In addition, if the seller or its other affiliates must use any purchased IP assets after closing, they may require a license back from the buyer to use those IP assets. [...]  „ Cease-and-desist and invitation-to-license letters from third-party IP owners.  „ Cease-and-desist and invitation-to-license letters to third parties.  „ Pending government investigations and proceedings. The buyer can perform online searches for some of these disputes to confirm the accuracy of the information the seller provides. When evaluating IP disputes, the buyer should consider, among other things:  „ The materiality of the dispute to the purchased business.  „ The worst- and best-case scenarios and their likelihood of occurring.  „ The availability of alternatives, including a technological workaround, in case of an injunction against the buyer.  „ The likelihood of settlement on terms acceptable to the buyer. [...]  „ Unregistered copyrights, including software source code (see also Proprietary Software).  „ Unregistered trademarks and service marks. To the extent possible, the buyer should confirm the ownership status of key unregistered IP the seller claims are owned by the seller and are included in the purchased assets. As with registered IP (see Common Registered IP Issues), in a carve-out transaction, the buyer should ensure that any unregistered IP that is primarily used by the business that comprises the purchased assets but owned by the seller or another seller affiliate is assigned or licensed to the buyer for use in the purchased business (see License Agreements and IP Assignments).

• [PDF] intellectual property and information technology due diligence in ...

  As is true with all legal claims, one does not want to acquire a lawsuit or the need for one in an M&A transaction. The IP area is particularly susceptible to legal disputes as a result of many of the recently promulgated authorities, which substantially change the legal environment by expanding or limiting various legal theories of interest to practitioners in the area.27 Since so much IP is licensed, and so much software used in the IT area is also licensed, DD work must always address not only prevailing legal doctrines in the respective areas—such as patent, copyright, trademark and trade secret—but also obligations contained in the applicable license documents. In many cases, behavior that is clearly permissible or, at worst, arguable under common and statutory law, is the subject of [...] depending on the relationship with the other party to the license, either request their consent or reconsider the structure of the deal. 71 Additionally, because many infringement suits arise from failed licensing negotiations (initially or with respect to renewal), 72 5. Patent Pools, Trade Regulation, and Other Considerations the target should include, on the disclosure schedule, any pending license negotiations and its status as either licensor or licensee. Any patent pools—arrangements whereby a group of patent holders allow each member of the group to utilize a specified group of patents developed by its members, with or without payment of a royalty—need to be identified, evaluated, and documented.73 In addition to patent pools, any collaborative arrangement whereby the target [...] any advice to the contrary, must be heeded by the ultimate decision-maker(s). The acquirer’s lawyers should rejoin the process when it addresses the target’s software license compliance approach and status. All licenses must be catalogued and characterized by type. That is, whether they allow the use of the software at one site, multiple sites, without limit within one firm or multiple firms under common control, by named users, by a specified number of users or on one or more specified computers, or are otherwise limited. Once this is done, an inquiry must be made as to known compliance/noncompliance and third-party vendor challenges as well as mechanisms in place to facilitate compliance.179 Organizations that rely upon “cute” technical practices to avoid or circumvent contractual use

• [PDF] Intellectual Property: Stock Purchases and Mergers - JD Supra

  „ „ Signed and delivered at closing. LICENSE AGREEMENTS In a carve-out transaction, the seller generally seeks to retain ownership of IP and IT assets owned by it at the time of the acquisition that are primarily used by the seller and its retained businesses. If the target company uses these assets in its business, the target company therefore may require an ongoing license to the seller’s IP to continue conducting its business in a consistent manner after closing. For example, affiliates often exploit patents and know-how in separate fields of use. Proprietary software may also have been developed by the seller and integrated into the target company’s business. The buyer may need a license to these IP and IT assets to operate the divested business without infringing the seller’s IP [...] The affiliates’ use of shared IP may be covered by intracompany licensing arrangements that can provide a template for ancillary licenses. However, the use of shared IP is often not formalized and IP is used under implied licenses. The parties must agree on the scope of the license for any IP to be licensed to the target company or buyer. Typically: „ „ The seller seeks to limit the license to the target company, for example, limiting the license grant to the scope of use at the time of the acquisition. „ „ The buyer in turn may seek more expansive rights, including the right for the buyer to use the IP or for the scope of the license to cover the growth of the target company’s business. [...] com/4-382-2164). In both stock purchases and mergers, the buyer directly or indirectly assumes control over all IP rights owned by the target company and the benefit of all licenses under which the target company uses third-party IP. However, to ensure that the target company will continue to have all IP rights necessary to operate its business, the buyer must consider: „ „ Any potential loss or impairment of the target company’s IP rights caused by the transaction itself (see IP and IT Agreements). „ „ In a carve-out transaction, the target company’s right to continue using IP retained by the seller or its other affiliates (see Carve-out Transactions).

• NVDA Acqui-hires Groq's Talent and Inference IP - Elliot's Musings

  independent, META got the person and the relationship without a full takeover. So when you look at NVDA and Groq through that lens, it stops looking like a random Christmas headline and starts looking like a deliberate adoption of the modern M&A workaround. NVDA wanted the inference blueprint and the people who built it without a long, ugly review cycle that could turn into another ARM saga. [...] Maybe it’s just me but I don’t think this deal should come as a surprise to people - NVDA have probably been looking for a deal like this ever since their £28bn Arm acquisition got terminated (blocked by CMA, FTC(?)). These type of workarounds make sense so they can avoid another fallout à la Arm in 2016 like you said. From NVDA’s view, I think it makes sense to pay $20bn now vs whatever it would’ve been 6 months or 1 year later to acquire potentially transformative inference tech, which in turn extends NVDA’s moat. There’s a part of me that thinks this deal is a response to Google + their TPUs. I’d love to get your thoughts! No posts ### Ready for more? [...] This Groq structure is not some one off hack. It mirrors a playbook Big Tech has been stress testing in public. GOOG did it years ago with HTC: a team of employees joining Google, and a non exclusive license for HTC IP, instead of buying the whole company. MSFT did it with Inflection in 2024: a licensing deal plus hiring most of the staff including the founders, and regulators still treated it as close enough to a merger to warrant scrutiny. AMZN followed with Adept, pulling in the founders and part of the team, and the FTC asked questions about the structure afterward. Then META turned the volume knob up again this year with Scale AI, taking a 49% stake while bringing CEO Wang over to lead its superintelligence push. Scale stayed independent, META got the person and the relationship

• Technology services firms: the hidden gems of the software M&A world

  ### Be clear on your IP strategy It’s not always necessary to have the finished article ahead of a sale or investment process. Many businesses will take on private equity investment or seek an acquirer to help accelerate IP development. There are ways of structuring an M&A deal to capture the future value of these assets, but critically, the thinking behind the asset needs to be fleshed out. Yes, a transaction can be completed without this clarity, but it will mean leaving significant value on the table and potentially challenging conversations in the future if there are misunderstandings around the future promise. ### Set the ratio of internal to external staff appropriately [...] ### Recurring revenues Increasingly, investors and trade buyers are willing to take a flexible view on the definition of recurring revenue and long-term retained clients. Even recurring project revenue can still count towards all important quality of earnings. Software-based IP, even when not fully productised, can still be positioned as recurring IP license charges which are explicitly contracted by the customer. It can also be integrated into multi-year contracts to create a financial dynamic very similar to pure SaaS, with a commensurate positive impact on business valuation. A further factor here is to consider an element of usage-based pricing in the commercial offer. Again, this can serve to create a rich seam of scalable, recurring revenue. [...] When it comes to software IP, solutions may not be fully productised in a SaaS sense, but even as a ‘service accelerator’ the IP can be properly documented and made easy to implement, so that an acquirer can easily assimilate it. The ability to showcase tried and tested IP and efficient scaling into enterprise clients can be crucial as a way of de-risking in the eyes of acquirers and investors. ### Scalability