IP Due Diligence

Evaluating Intellectual Property Assets in Business Transactions

Intellectual property often represents a significant portion of enterprise value, making IP due diligence essential for informed transaction decisions. Whether clients are acquiring companies, making investments, entering partnerships, or extending financing, understanding the target's IP position enables appropriate valuation, risk assessment, and deal structuring. This practice provides comprehensive IP due diligence services across transaction types and industries, delivering actionable intelligence that supports sound business decisions.

Due Diligence Planning

Effective due diligence begins with understanding the transaction context and tailoring the investigation accordingly. Due diligence scope depends on the transaction type—full acquisitions require comprehensive review while limited investments may warrant focused analysis of key assets. Industry characteristics affect which IP forms matter most and what issues typically arise. Timeline constraints require prioritization of critical issues. Budget parameters influence depth of investigation. Counsel develops due diligence plans that address client needs efficiently within available time and resources.

Patent Due Diligence

Patent evaluation examines both the strength of patent assets and associated risks. Asset analysis covers portfolio scope and coverage, prosecution status and pendency, claim breadth and validity considerations, maintenance status and remaining term, and inventor and ownership chain verification. Risk analysis examines potential infringement exposure from third-party patents, freedom to operate for planned activities, prior art that might affect validity, and ongoing or threatened litigation. Patent due diligence provides a complete picture of the patent landscape affecting the transaction.

Trademark Due Diligence

Trademark analysis evaluates both registration status and underlying rights. Investigation covers registration scope across relevant jurisdictions, use verification confirming marks are actually in commerce, ownership and assignment chain review, pending applications and opposition proceedings, coexistence agreements and other restrictions, and enforcement history demonstrating rights maintenance. Trademark due diligence ensures that valuable brands will transfer effectively and remain enforceable post-closing.

Copyright Due Diligence

Copyright investigation is particularly important for content businesses, software companies, and creative enterprises. Analysis addresses copyright ownership including work-for-hire status and assignment documentation, registration status affecting enforcement options, license obligations affecting use rights, open source software usage and compliance, and third-party content incorporated into products. Copyright due diligence prevents nasty surprises when ownership or licensing issues surface after closing.

Trade Secret Due Diligence

Trade secrets present unique due diligence challenges since they are not publicly recorded. Investigation evaluates what confidential information exists that may qualify for trade secret protection, what measures the target has implemented to maintain secrecy, employee agreement coverage and enforceability, third-party confidentiality protections, and any known or threatened misappropriation. Trade secret due diligence assesses both value and vulnerability of confidential business information.

Technology and License Agreements

IP value often depends on contractual arrangements that must be evaluated alongside registered rights. Agreement review covers inbound licenses providing rights to third-party IP, outbound licenses affecting target's ability to practice its own IP, development agreements that may affect IP ownership, distribution and reseller arrangements, and assignment and change-of-control provisions that may affect transferability. Understanding the full contractual picture is essential for transaction structuring.

Risk Assessment and Mitigation

Due diligence findings inform risk assessment and mitigation strategies. Identified risks may affect valuation, leading to purchase price adjustments. Representation and warranty provisions can allocate risk between parties. Indemnification obligations address specific identified concerns. Escrow arrangements provide security for contingent liabilities. Pre-closing remediation may resolve issues before they transfer. Post-closing integration plans address issues requiring ongoing attention. Effective due diligence enables appropriate risk allocation and transaction structuring.

Due Diligence Deliverables

Due diligence results must be communicated clearly to support decision-making. Deliverables range from summary memoranda highlighting key issues and recommendations to comprehensive reports providing detailed analysis of all investigated matters. Issue lists track identified concerns requiring resolution. Red flag alerts communicate critical issues requiring immediate attention. Clear, actionable reporting enables clients and their advisors to use due diligence findings effectively.