The Unwelcome Truth of Due Diligence: When Knowing the Risks Becomes the Risk Itself

As technological innovation accelerates, so too does the race to understand and navigate intellectual property (IP). In today’s dynamic landscape, startups and investors are increasingly aware of the necessity of early IP due diligence, especially as venture capital fuels an ever-growing roster of emerging tech. Yet, a nasty paradox lurks in this space — one that reveals itself only in the fine print: the knowledge of potential infringement risks may lead to a legal quagmire all its own. And this isn’t just a hypothetical… for those deeply immersed in the intersection of technology and IP, it’s an unsettling reality.

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At Evalify, we have always been straightforward: we wanted to equip founders, researchers, investors, and even attorneys with the tools needed to perform a preliminary freedom-to-operate (FTO) analysis, ensuring that ideas are protected and innovation can thrive within the boundaries of IP law. Evalify is designed as a proactive measure, allowing users to catch potential IP conflicts early and avoid costly battles down the line. Yet, after numerous conversations with investors, patent attorneys, and other stakeholders, it became evident that some were wary of precisely what we intended as a benefit. Evalify’s ability to uncover potential infringements could inadvertently transform a founder’s or investor’s risk awareness into a liability. Knowledge, after all, is a double-edged sword.

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The Risk of Knowing Too Much

When an investor or founder conducts a freedom-to-operate analysis and finds potential patent conflicts, they now possess knowledge that could have significant legal implications. In the eyes of the law, awareness of potential infringement brings with it a level of intent — or, in legal parlance, willful infringement. This term implies that if one moves forward with their venture, they knowingly step into contested IP territory, opening themselves up to steeper damages should litigation arise.

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For some attorneys, and indeed even for some investors, this poses a thorny dilemma. What was intended as a proactive safeguard — an early due diligence check that should add clarity and confidence — now reveals potential risks that, from a legal standpoint, they might have preferred to remain unknown. Yup… one minute of silence here. Sometimes, it’s as though Evalify shows them exactly what they didn’t want to see.

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A Proactive Approach or a Liability Trigger?

Evalify was built around the principle that protecting against IP risks should start as early as possible. However, this push for early discovery of IP risks may inadvertently bring its own brand of risk. While traditional FTO analyses are conducted further along in a company’s lifecycle, Evalify aims to empower investors and entrepreneurs to understand potential patent issues right from the ideation stage. Our ultimate goal is to be an innovation partner, helping builders and investors navigate an increasingly complex IP landscape and allowing investors to gauge the long-term viability of their bets better.

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However, by “lifting the curtain” on these risks earlier, we inadvertently prompt difficult questions: If knowledge of potential infringements makes investors legally vulnerable, does it discourage them from performing IP checks altogether? In our mission to foster awareness, are we introducing a liability paradox that may push some to forgo due diligence for fear of knowing too much? Jeez.

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Turning Point or Tipping Point?

Much like the shift in public perception around smoking, from the widespread acceptance in the 1950s to the undeniable link with cancer recognized in recent years, we are witnessing a similar evolution in the world of IP due diligence. Just as society eventually faced the inconvenient truth about smoking, venture capital and the tech industry are grappling with the implications of proactive IP risk assessment. Initially, the idea of early IP awareness seemed like an unequivocal benefit — just as smoking was once thought to be harmless. However, as more stakeholders recognize the legal complexities of knowing too much, the narrative shifts, revealing a new caution around IP checks. This could be our turning point, a shift that redefines what it means to protect innovation responsibly.

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For an industry as risk-sensitive as venture capital, the implications are significant. Investors and attorneys may find themselves between two opposing forces: the moral and fiduciary responsibility to vet for IP risks and the potential legal consequences of knowing these risks in the first place. Ironically, we may be witnessing a moment similar to the early days of climate change awareness — when the inconvenient truth about global risks left people grappling with the potential consequences of acknowledging those risks.

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While Evalify isn’t aiming to discourage innovation or take the air out of investor enthusiasm, it’s clear that a new level of nuance is needed in IP due diligence. The value of knowing potential infringements early is only increasing, yet how that knowledge is managed and documented may need to adapt to prevent unintended consequences.

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Toward a Balanced Perspective on IP Awareness

In navigating this paradox, Evalify remains committed to transparency, trust-building, and strategically leveraging existing IP to enhance decision-making. We believe that the solution lies not in avoiding awareness but in ensuring that stakeholders — investors, founders, attorneys, and innovators alike — understand both the benefits and responsibilities that come with proactive IP checks. New approaches and policies may need to emerge, particularly in how this knowledge is documented and acted upon.

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Ultimately, the question isn’t whether we should pursue IP awareness but how we navigate the legal and ethical terrain that this awareness uncovers. Rather than backing away from these insights, the industry must seek solutions that uphold innovation integrity while respecting IP law’s nuances. After all, the future of innovation depends not just on what we create but on how well we navigate the sometimes-uneasy, hidden knowledge of what has already been created… or invented.

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