Sunstein’s Approach to Business & IP Transactions

We strive to provide our business clients with the legal tools they need for success. We provide a full range of corporate and transactional legal services, integrating our expertise in technology and intellectual property law to advance our clients’ business goals. We handle public and private securities offerings, corporate governance matters, mergers and acquisitions, tax planning, regulatory compliance, marketing, and business operations. We are equally at home with Fortune 500 clients and with young companies just beginning to move intellectual property from the inventor’s table to the marketplace. Our business advice is informed by our expertise in engineering and science.

Our approach to business and IP transactions commonly involves these fundamental steps:

  1. Understanding our clients’ business objectives with particular attention to the role of intellectual property and technology;
  2. Developing strategies and a business structure that advance these objectives, minimize tax exposure, and maximize the value of assets, including intellectual property;
  3. Developing and carrying out a realistic financing strategy that provides capital at a fair price on reasonable terms;
  4. Providing ongoing counsel for business operations, including strategic advice for protecting and/or licensing intellectual property, motivating key executives, and clearing regulatory hurdles.

Each of these activities is described in further detail below. We welcome the opportunity to meet with prospective clients to discuss their particular needs.

Understand business objectives

We work with our clients to understand and refine both short- and long-term business objectives. With our technical depth, we are particularly proficient with strategic input that fully considers the interplay between business objectives and intellectual property development. In working with a company that developed a new food category, for example, we filed patent applications to protect our client’s invention, introduced the client to a food industry marketing expert, and helped the marketing expert understand and sell the unique product.

Develop a business structure

We develop and implement a business structure that best advances our client’s strategy and objectives. One of our clients established a not-for-profit health management and delivery services company with the goal of providing health care services to aged and severely disabled patients in Massachusetts. We created the structure for a unique, non-traditional organizational model permitting our client to achieve its goals successfully and cost-effectively.

We combine our in-depth knowledge of business structures and intellectual property to develop creative solutions to IP ownership problems. When our client and its collaborator were at loggerheads, unable to agree on a corporate entity that would own the intellectual property and technology that they were developing together, we devised a plan that worked for both parties: an unusual tenants-in-common arrangement.

Our background in technology and IP prosecution and litigation also informs our tax counseling. We are frequently asked to evaluate the potential risks of using IP holding companies to maximize tax benefits. In making recommendations among alternative models of IP ownership, we take into account not only the potential for tax savings but the effect of a proposed structure on the potential recovery of damages in IP litigation, efficient management of the intellectual property, and the risks of challenge to IP ownership. As a result, our clients are able to consider tax issues in the context of sometimes divergent IP ownership and management considerations.

Develop innovative and flexible strategies

We pride ourselves on our ability to tailor cost-effective and successful strategies to the needs of companies ranging in size from start-up to Fortune 500 member.

In working with technology start-ups, we are sensitive to our clients’ need for high quality and forward-thinking legal services within the constraints of a disciplined budget. We focus on the entrepreneur’s key concerns, mindful of the need for a flexible strategy that will accommodate rapid growth of the business. Often these key concerns include entity structure, protection of trade secrets, equity incentive plans such as stock options, employment agreements, private placements of securities, debt financing, and positioning the company for a future public offering.

We work creatively to address tough business problems. One client contemplated a not-for-profit structure to exploit cutting edge medical technology owned by his corporation, so as to create a university-like setting that would attract the best scientists. After we helped him identify his goals and provided the cost/benefit analysis of alternative strategies, he opted for a plan that enables him to steer free of the constraints applicable to tax-exempt entities while maintaining an attractive setting for scientists. The plan preserves the potential of generating significant license royalties, and provides a royalty-sharing mechanism that rewards scientists in proportion to their contributions to the intellectual property base upon which the enterprise is built.

Our facility with technology and intellectual property law keeps us attuned to the infinite opportunities for turning our clients’ intellectual property into valuable business assets. We can assist our clients in conducting intellectual property “audits” to uncover underappreciated assets that may enhance the value of the business. For example, we can identify trade secrets and advise as to the legal safeguards that must be in place to protect them.

Our frequent experience with licenses and joint ventures allows us to craft agreements that maximize our clients’ ownership and control. Our technical backgrounds permit us to give special attention to the definition of the technology, which often is the key to the parties’ rights in the deal. We also pay careful attention to the intricacies of IP law to assure that deal is effective in protecting our clients’ interests even as business circumstances change over time.

Develop and pursue a financing strategy

All companies need capital to thrive. We know how our clients can best position themselves to attract financing, and we enjoy connecting our business clients with investors. To help our clients obtain the financing they need, we have implemented complex venture capital funding for professional practices. We have represented clients in connection with angel and venture capital financing, and handled public offerings. By protecting our clients’ intellectual property in its diverse forms, by clearing up clouds on title, and by presenting analyses of patent portfolios to investors, we have helped our clients attract capital.

We helped one inventor client who was operating a small consulting business raise over $7 million in equity. Along the way, we prepared investor subscription agreements, private placement memoranda, and a registration rights agreement, and took the steps necessary to assure that the client’s equity financing complied with state and federal securities laws. We also supported this client in the acquisition and development of a manufacturing facility, in revising its stock option plan, and in filing an SEC registration statement. We continue to file new patent applications for this client, and to assist in the commercialization of the client’s new inventions.

For another client, we negotiated agreements for over $8 million in investments. Our intimate knowledge of our client’s patents and medical technology gave us the necessary credibility with the financing source. We also helped with its FDA approval process, devised an international tax strategy sensitive to the needs of its offshore investors, and introduced the client to several U.S. investors.

Provide ongoing business counsel

Our lawyers’ extensive experience in IP and background as in-house counsel make us sensitive to the legal challenges faced by technology-driven companies. We routinely provide advice concerning tax-advantaged compensation arrangements, hiring of executives who may have signed non-competition agreements with prior employers, export controls, purchase-order terms and conditions, consulting agreements, and acquisitions of other companies. Whether a company has no in-house counsel and needs a range of services or has sophisticated in-house counsel and requires specialized counsel, particularly with respect to IP business issues, we are ideally suited to provide cost-effective service.

If you are interested in discussing how Sunstein can assist you in connection with business and IP transactions, please contact a member of our Business Practice Group.