IP Due Diligence in Life Sciences Deals: What Kenyan Investors and Acquirers Should Check

IP due diligence in a Kenyan life sciences deal is not a paperwork exercise. Biotech, pharma, medical device and health-tech businesses carry most of their value in patents, trade secrets and software, and that value is only as good as the seller’s title to it. Investors who limit their review to a KIPI certificate and a signed licence routinely miss what matters: an inventor who never assigned, a licence that terminates on change of control, or source code built on open-source terms nobody checked. This article sets out what IP due diligence should cover in a Kenyan life sciences transaction, and the local gaps a buyer has to work around.

Patent Ownership and Chain of Title: The Spinout Problem

Under the Industrial Property Act, No. 3 of 2001, the right to a patent belongs to the inventor by default. Where the invention was made in execution of a commission or an employment contract, section 32 shifts that right to the employer or commissioning party, subject to equitable remuneration for the employee in defined circumstances. That allocation rarely holds up cleanly in university spinouts, where an academic may have used institutional facilities and funding, worked with students who are not “employees” in the strict sense, or kept developing the invention after moving into a private venture.

Diligence has to trace the chain of title invention by invention: the employment or research contract, any assignment deed, and the KIPI or ARIPO file history showing the named applicant. Section 31 is a useful check here: it provides that where an applicant has obtained the essential elements of an invention from another person’s work, the applicant is obliged, absent authorisation, to assign the application or patent to that person. A target unable to produce a signed assignment from every named inventor has a live section 31 exposure, to be cured before closing.

Freedom to Operate and Validity Risk

Owning a patent is not the same as being free to operate. A target’s own portfolio can be clean while its product still infringes a third party’s rights, particularly in combination products or diagnostics built on licensed platform technology. An FTO review should map the target’s product claims against granted and pending patents in Kenya and any ARIPO-designated states relevant to its markets, not Kenya alone, where the target manufactures for export or sells regionally.

Validity is the other side of that coin, and Kenya has tribunal precedent worth knowing. In Kibo Capital Group Limited & another v Safaricom PLC, the Industrial Property Tribunal heard an infringement claim over utility models for receipt and payment reconciliation systems, alongside a counterclaim to revoke the registrations for lack of novelty. It dismissed both, but confirmed that Kenyan rights can be challenged on novelty and prior-use grounds, and that independent development before a filing date is a recognised defence to an apparently blocking right.

Trademark Portfolio Review at KIPI

Brand value in a life sciences business, especially health-tech and consumer-facing pharma, often sits in trademarks rather than patents. A KIPI register search should confirm every mark the target uses is registered in the classes it trades in, that the registered proprietor matches the operating entity rather than a founder or an out-of-perimeter affiliate, and that renewals are current. The Trade Marks Act, Cap 506, sets out the mechanics: section 21 governs opposition, sections 25 to 28 govern assignment and its recording, and sections 35 to 38 cover rectification of the register. An assignment never recorded at KIPI under section 28 is a defect, so register history matters more than the certificate itself.

Pending oppositions and cancellations deserve their own line item. A mark under opposition is not yet secure, and a target facing a non-use cancellation may hold a right that looks solid on paper but will not survive a challenge. Query KIPI’s register directly, since a target’s own summary is not always a reliable guide to what is actually contested.

Trade Secrets, Licensing and Health-Tech Data and Software IP

Much of a life sciences target’s real value, formulation know-how, manufacturing process and research data, is protected only as a trade secret, if at all. Kenya has no standalone trade secrets statute, so protection depends on confidentiality contracts and internal controls genuinely being in place. Diligence should test whether NDAs actually cover the information at issue, whether everyone with access was bound by one, and whether the target treated it as confidential in practice.

Licensing is where change-of-control risk concentrates. Licences in and out, for platform technology, manufacturing or distribution, need checking for clauses letting a counterparty terminate or renegotiate on completion. Licence contracts must be in writing and signed to be effective, certain restrictive terms can be refused registration, and an unregistered licence can leave its enforceability against third parties uncertain.

For health-tech targets, source code ownership needs the same rigour as patent chain of title: contractor agreements should show a clear assignment clause, and an open-source audit should confirm no copyleft components force disclosure of proprietary code.

Kenya-Specific Gaps: Litigation History and the ARIPO Route

Kenya’s local patent litigation history is thin compared to larger jurisdictions, which cuts both ways. There is less precedent to predict how a validity or infringement dispute would be decided, making FTO opinions more conservative by necessity. It can also mean enforcement risk against a target’s own rights is lower than the register suggests, simply because fewer competitors have tested it. A clean litigation history is not proof of a strong portfolio, only that nobody has challenged it yet.

Kenya is a contracting state to the ARIPO Harare Protocol, which lets an applicant obtain patent protection across multiple African states, Kenya included, through one regional application rather than separate national filings. Many life sciences targets with a regional footprint hold rights through the ARIPO route rather than direct KIPI filings, so diligence needs to check both registers. A search of the Kenyan national register alone can miss protection that only shows up once Kenya’s ARIPO designation status is checked.