IP Due Diligence Checklist for Mergers and Acquisitions: A Practical Checklist

Summary. In a technology or brand acquisition the IP often is the deal, and the most expensive findings are ownership gaps rather than infringement risks. This checklist runs diligence in the order that surfaces those gaps early: inventory, chain of title back to every individual creator, and whether contractors and founders actually assigned what everyone assumes. It then covers registrations and maintenance, inbound and outbound licenses and their change-of-control terms, open source, trade secrets, encumbrances, and disputes — then translates findings into pre-closing fixes, representations, indemnity, and price.

What this checklist is for. Buy-side IP diligence, and sell-side preparation. For the transaction mechanics, see Buying and Selling a Small Business.

Phase 1 — Build the inventory

Patents and applications: number, jurisdiction, status, owner of record, expiration, maintenance fees paid, and any terminal disclaimers.
Trademarks and applications: mark, class, jurisdiction, registration number, owner of record, first use dates, and renewal deadlines.
Copyrights: registered works, unregistered works of value, and software.
Trade secrets: the categories and the identified crown jewels.
Domain names, social handles, and app store listings — routinely omitted from schedules and routinely registered to a departed employee's personal account.
Data assets: databases, models, training datasets, and the rights that permit their use.
Software: proprietary code, third-party components, and build/deployment dependencies.
Compare the target's schedule to independent searches of the USPTO assignment database, TSDR, the Copyright Office catalog, WHOIS, and UCC filings. The gaps between the schedule and the public record are the first real finding.

Phase 2 — Chain of title, where the deals actually break

For each patent, trace assignments from every named inventor to the target, and confirm recordation with the USPTO. 35 U.S.C. § 261.
Confirm assignment language is a present assignment ("hereby assigns"), not a promise to assign. Filmtec Corp. v. Allied-Signal Inc., 939 F.2d 1568 (Fed. Cir. 1991); Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., 563 U.S. 776 (2011).
Confirm every employee who created IP signed an invention assignment agreement, and check state limits on their scope (California Labor Code § 2870 and comparable statutes in Washington, Illinois, Minnesota, and others).
Confirm every independent contractor who created copyrightable work executed a written assignment. Contractor work is generally not work made for hire unless it fits one of the nine statutory categories and there is a signed writing, 17 U.S.C. § 101 — and software usually does not fit. Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989).
Confirm the founders assigned pre-incorporation work, including anything built before the entity existed.
Check for prior employer claims: did any founder or key engineer build the technology while employed elsewhere, using that employer's time or resources?
Check for university or government rights: Bayh-Dole obligations, 35 U.S.C. §§ 200-212, sponsored research agreements, and student or faculty IP policies.
Check for joint ownership, which in the US permits each co-owner to license without accounting and can require all co-owners to join a patent suit. See Copyright Ownership, Joint Authorship, and Termination of Transfers and Patent Ownership, Assignments, and Standing.
Check for termination of transfer rights under 17 U.S.C. §§ 203, 304(c) on older copyright grants.
Confirm no gaps created by corporate history: name changes, mergers, dissolved predecessor entities, and assets left in a shell.

Why this matters. An ownership gap is not a risk to be priced; it is a defect that can prevent the buyer from suing infringers, from licensing, or from claiming the asset at all. It is also usually fixable before closing — but only if you find it before closing.

Phase 3 — Registrations: status and validity signals

Confirm maintenance and renewal deadlines and that nothing is in a grace period or abandoned.
Review prosecution histories for prosecution disclaimer and for statements that narrow claim scope.
Review any IPR, PGR, reexamination, opposition, or cancellation proceedings.
For trademarks, confirm actual use in commerce for the goods and services listed, and that specimens are genuine — an overbroad registration is vulnerable to cancellation, and false specimens are an existential problem. See Trademark Maintenance and Renewal Checklist.
Confirm incontestability filings where available, and any consent, coexistence, or settlement agreements limiting the mark's use.
For copyrights, confirm registration for works the buyer may need to enforce; registration is a precondition to suit. Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, 586 U.S. 296 (2019).
Confirm the owner of record matches the target entity, and that recordation is current.

Phase 4 — Licenses in and out

Inventory inbound licenses: scope, field, territory, exclusivity, term, royalties, minimums, audit rights, and termination.
Check assignability. A non-exclusive patent or copyright license is presumptively not assignable without consent under federal common law, even in a merger in some circuits. Cincom Systems, Inc. v. Novelis Corp., 581 F.3d 431 (6th Cir. 2009); In re XMH Corp., 647 F.3d 690 (7th Cir. 2011).
Check change of control provisions — a stock deal or merger can trigger termination even where an "assignment" does not.
Identify consents required and start collecting them early; a key licensor's consent is a closing condition, and its price rises after the deal is public.
Inventory outbound licenses: exclusivity that limits the buyer's own use, most favored nation clauses, non-competes, non-assertion covenants, and reserved fields.
Identify source code escrow obligations and release conditions.
Identify standard-essential patent commitments and FRAND obligations.
Identify licenses with government customers, which carry their own rights in technical data and software.

Phase 5 — Open source and code

Obtain a software composition analysis report; do not rely on the target's spreadsheet.
Identify copyleft components (GPL, AGPL, LGPL) and whether the target's distribution or network use triggers source disclosure obligations.
Confirm attribution and notice obligations are satisfied for permissive licenses.
Identify license incompatibilities and any component with no license at all.
Identify AI-generated code and the license-filter settings used, plus provenance records. See AI Vendor Procurement and Governance Checklist.
Confirm an open source policy and approval process exist, and whether they were followed.
Quantify remediation: replacing an AGPL component in a shipping product is a schedule and budget item, not a footnote.

Phase 6 — Trade secrets, encumbrances, and disputes

Confirm reasonable measures to protect trade secrets: NDAs, access controls, marking, exit interviews, and training. Without them, the asset may not exist. 18 U.S.C. § 1839(3); see Building a Trade Secret Protection Program Checklist.
Review restrictive covenants for key employees, their enforceability in the applicable states, and whether they survive the transaction.
Search UCC-1 filings and the USPTO/Copyright Office for security interests; confirm releases will be delivered at closing.
Identify liens, judgments, and bankruptcy history affecting IP.
Review pending and threatened disputes: litigation, demand letters, cease-and-desist correspondence, and opinions of counsel.
Assess freedom to operate for the core products, at least at the level of known third-party patents and any prior FTO opinions. See Freedom-to-Operate and IP Clearance Toolkit.
Review indemnity obligations owed to customers and their caps; an uncapped IP indemnity in a large customer contract is an assumed liability.
Review privacy and data rights underlying any data asset — data acquired without adequate rights cannot lawfully be used post-closing. See State Consumer Privacy Laws.

Phase 7 — Turn findings into deal terms

Classify each finding: fix before closing, condition to closing, special indemnity, price adjustment, or accept.
Draft pre-closing fixes: confirmatory assignments, recordations, corrected inventorship (35 U.S.C. § 256), consents, lien releases, and open source remediation.
Draft IP representations: ownership free of encumbrances, sufficiency of assets to run the business as conducted, non-infringement, validity, all employees and contractors assigned, no open source that requires disclosure of proprietary code, and no government or university rights.
Add a sufficiency representation — that the transferred IP includes everything needed to operate as currently conducted. It catches the asset nobody scheduled.
Negotiate special indemnity with its own cap, basket, and survival for specific known issues, and confirm the escrow amount reflects them.
Evaluate representation and warranty insurance and its IP exclusions — known issues are excluded, so the special indemnity remains necessary.
Confirm the transfer mechanics: separate assignment instruments for patents, trademarks (with the associated goodwill — a trademark assignment in gross is invalid), copyrights, and domains, plus registrar transfer authorizations and post-closing recordation.
Build a post-closing integration list: recordation, renewal calendars, registrar transfers, code remediation, and license consents that closed on a waiver.

Common mistakes

Relying on the target's schedule instead of the public record.
Missing contractor assignments and assuming work made for hire.
Ignoring change of control provisions in inbound licenses.
Skipping a composition analysis and discovering AGPL after closing.
Not recording assignments, leaving title clouded.
Assigning a trademark without goodwill.
Buying data the target never had the right to use.
Assuming R&W insurance covers known IP issues.
Leaving domains in a former employee's personal registrar account.

Primary authority

Cases: Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., 563 U.S. 776 (2011); Filmtec Corp. v. Allied-Signal Inc., 939 F.2d 1568 (Fed. Cir. 1991); Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989); Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, 586 U.S. 296 (2019); Cincom Systems, Inc. v. Novelis Corp., 581 F.3d 431 (6th Cir. 2009); In re XMH Corp., 647 F.3d 690 (7th Cir. 2011); Everex Systems, Inc. v. Cadtrak Corp., 89 F.3d 673 (9th Cir. 1996).
Statutes: 35 U.S.C. §§ 200-212, 256, 261; 17 U.S.C. §§ 101, 201, 203, 204, 304, 411; 15 U.S.C. § 1060; Defend Trade Secrets Act, 18 U.S.C. §§ 1836-1839; UCC Article 9.

This checklist is educational and not legal advice. Diligence scope should be tailored to the deal, the industry, and the consideration at stake. Consult qualified transactional and IP counsel.