IP Due Diligence in M&A Transactions

In any acquisition or merger, a serious investor starts with IP review as the first step. Why? Because IP is often the most important asset, and it does not show clearly on financial statements. Five axes for serious review.

1. Complete IP Asset Inventory

A list of every trademark, patent, design, copyright, and trade secret the target company owns.

Each asset with: registration number, filing date, issue date, expiration date, registered countries, classes.

Standard: no asset without documentation. An asset the seller cannot document is commercially non-existent.

2. Ownership Verification

Is the company the true owner of the assets, or are they registered to a former founder or third party?

Verify the chain of title for every core asset.

Common trap: a startup uses code its founder wrote before the company was incorporated. The code is still legally personal.

3. Renewal Status and Deadlines

An expired or near-expiring mark = a soon-lost asset. Discount from valuation.

Check renewal schedules for every mark and patent.

Verify annual patent fees are paid. Late = the patent may have lapsed.

4. Licenses and Obligations

Are any assets under exclusive or non-exclusive licenses to third parties? These restrictions transfer with the deal.

Open-source software licenses may obligate the company to open its code — massive legal risk.

Employee contracts: do they contain valid IP clauses? Gaps here are dangerous.

5. Ongoing and Potential Disputes

Current infringement cases (against the company or by it).

Legal warnings the company received not yet resolved.

Competitor marks or patents recently registered that may threaten competitive position.

Review warning letters and legal correspondence for at least the last two years.

The Outcome

A comprehensive due diligence report containing asset list, risk rating, recommendations (red flags).

Treatment clauses in the acquisition contract: seller warranties, specific indemnities, closing conditions.

At Rights we run full IP due diligence for investment deals and deliver an integrated report to the investor or seller.

Related articles

IP STRATEGY

The Madrid Protocol for International Trademark Registration: A Practical Guide

How to protect your mark in 130 countries with a single application. The Madrid Protocol simplifies international filing — but here are its conditions and limits.

IP STRATEGY

The Unified GCC Trademark System

One mark, protection in six countries. How the Gulf Cooperation Council system works — and when it is better than direct registration.

IP STRATEGY

Protecting Your Trademark in China: What You Need to Know

China is the world's largest manufacturing market — and the most dangerous environment for trademarks. Why "first to file" is unforgiving, and how to protect yourself.