IP Due Diligence in M&A Transactions: What Buyers Must Check

In technology, consumer goods, pharmaceutical, and brand-driven acquisitions, intellectual property is not a supporting asset — it is the acquisition. Missing an IP defect in due diligence can mean acquiring a company whose core asset is owned by a third party, encumbered by a licence, or facing infringement claims. **The IP Due Diligence Framework** IP due diligence in M&A covers five categories: **1. Trademark** - Ownership verification: are the marks registered in the target's name? - Status: are the marks active, renewed, and free of oppositions? - Key jurisdiction coverage: does the registration cover all key markets? - Licensed marks: is the target using marks it doesn't own? Under what licence? - Infringement: is there pending litigation or claims over the marks? **2. Patents** - Patent register: what is the complete patent portfolio? - Expiry dates: are key patents approaching expiry? - Assignments: have all patents been properly assigned from inventors to the company? - Licences: outbound licences (who is using the patent?) and inbound licences (what technology does the company licence from others?) - FRAND obligations: for standard-essential patents, what are the licensing obligations? **3. Copyright** - Software: has all software used by the company been properly licensed? Are there open source components with restrictive licences (GPL, LGPL)? - Content: is customer-facing content (website, marketing materials) owned or licensed? - Employee-created content: have employees properly assigned copyright in works created in the course of employment? **4. Trade Secrets** - Information security: are trade secrets protected by appropriate access controls and employee obligations? - NDAs: are NDAs in place with all employees, contractors, and counterparties who have access to confidential information? - IP assignment: have all contractors and consultants assigned IP to the company? **5. Employment IP** The most common IP defect in technology company acquisitions: a founder or early employee who developed core IP before or alongside their employment, without proper assignment. This creates ownership ambiguity that can invalidate the entire acquisition thesis. **Red Flags** - Core technology developed by founders before company incorporation, without subsequent assignment - Software development contractors who were not given IP assignment agreements - Expired trademark registrations in key markets - Pending trademark oppositions on core marks - Open source software with GPL licence in proprietary products (creates "copyleft" obligations) - Employee competition clauses that may be unenforceable under Indian law **The Remediation Strategy** Not all IP defects are deal-killers. Many can be remediated — through assignment agreements, licence renegotiations, trademark applications, or contractual indemnities. The due diligence report should distinguish between material defects that affect the acquisition price or structure and manageable defects that can be remediated post-closing.