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<p>When companies evaluate a potential acquisition, investment, partnership, or merger, intellectual property (IP) often becomes one of the most valuable - and most overlooked - assets on the table. From brands and technology to trade secrets and creative content, IP can drive a company’s competitive advantage and future value. But it can also create major risks if it’s not properly owned, protected, or maintained.</p><div><p>This is why a thoughtful, structured IP due diligence review is essential in any transaction. Below is a simple guide to understanding what IP due diligence involves and the best‑practice steps businesses should follow to get it right.</p><h2><strong>Why IP Matters in Transactions</strong></h2><p>Intellectual property can significantly influence deal value. Thorough IP due diligence helps answer key questions:</p><ul><li><strong>Does the company actually own its IP? </strong>Ownership gaps (such as contractors who never assigned their rights) can become costly surprises.</li><li><strong>Is the IP protected and enforceable? </strong>Lapsed filings, weak trademarks, or unpatented innovations can reduce value or require remediation.</li><li><strong>Is the IP free from third-party claims? </strong>Infringement disputes, open-source licensing issues, and restrictive agreements can all create risk.</li><li><strong>Does the IP support the company’s strategic goals? </strong>Understanding how the IP aligns with business plans informs deal pricing and integration planning.</li></ul><h2><strong>Best-Practice Steps for Conducting IP Due Diligence</strong></h2><p>Below is a streamlined playbook for an effective IP review.</p><h3><strong>1. Identify the Full IP Portfolio</strong></h3><p>A good diligence process starts with a clear inventory of all IP assets, often including:</p><ul><li><strong>Patents and patent applications</strong></li><li><strong>Trademarks, brand names, and logos</strong></li><li><strong>Copyrighted works</strong> (software, marketing content, product materials)</li><li><strong>Trade secrets and confidential know‑how</strong></li><li><strong>Domain names and social media handles</strong></li><li><strong>Licenses</strong> (both inbound and outbound)</li></ul><p><strong>Tip:</strong> Ask not only for registered IP but also unregistered IP—many valuable assets go unfiled.</p><h3><strong>2. Verify Ownership and Chain of Title</strong></h3><p>Buyers and investors need to confirm that the company legally owns the IP it claims.</p><p>Key checks include:</p><ul><li>Employee and contractor invention assignment agreements</li><li>Acquisition and transfer records</li><li>Registration documents</li><li>Joint development agreements</li></ul><p><strong>Red flags:</strong> missing agreements, unclear ownership history, or shared rights with third parties</p><h3><strong>3. Assess the Strength and Status of IP Protections</strong></h3><p>Review how well the company has maintained its IP:</p><ul><li>Are patents active and renewed?</li><li>Are trademarks registered in all relevant markets?</li><li>Are trade secrets protected by policies and confidentiality practices?</li><li>Are copyright registrations accurate and up to date?</li><li>Are software products using open-source code in a compliant way?</li></ul><p>Strong protections support higher valuation and reduce risk.</p><h3><strong>4. Look for Infringement Risks and Disputes</strong></h3><p>Potential liabilities must be uncovered early:</p><ul><li>Pending or threatened litigation</li><li>Claims of copying or unauthorized use</li><li>Competitor challenges</li><li>Prior art that may affect patent validity</li><li>Improper use of open-source licenses</li></ul><p>Even small disputes can expand once ownership changes.</p><h3><strong>5. Evaluate Key Contracts and Obligations</strong></h3><p>IP rights often depend on contractual relationships, including:</p><ul><li>Licensing agreements</li><li>Supplier and manufacturing contracts</li><li>Research collaboration agreements</li><li>Software development contracts</li><li>Non-compete and non-disclosure agreements</li></ul><p>Focus on terms that restrict use, require payments, or limit transfer of IP in a transaction.</p><h3><strong>6. Understand How the IP Supports the Business Model</strong></h3><p>Finally, IP must be viewed strategically, not just legally. Ask:</p><ul><li>What IP drives revenue?</li><li>What IP differentiates the business?</li><li>Which assets are mission‑critical for future growth?</li><li>Are there gaps in protection where competitors could enter?</li></ul><p>This helps inform valuation, negotiation, and post‑deal integration planning.</p><h2><strong>The Bottom Line</strong></h2><p>IP due diligence isn’t a legal formality, it’s a strategic necessity. A thorough, well-structured review:</p><ul><li>Reduces transaction risk</li><li>Helps avoid expensive surprises</li><li>Supports fair valuation</li><li>Strengthens negotiation positions</li><li>Sets the foundation for long-term success</li></ul><p>Whether you're acquiring a company, investing in one, or forming a strategic partnership, understanding the full picture of its IP assets is essential.</p></div><input type='hidden' id='passle-remote-hosting-tracking-shortcode' value='102m25i'/><div class="passle-featured-image passle-featured-image-position-bottom"><img src="https://images.passle.net/fit-in/400x400/filters:crop(38,0,2175,1224)/Passle/5f6edd8e8cb62a0bec3e5fd2/SearchServiceImages/2026-01-15-23-21-35-498-6969767f3f3115dc87ba44d8.jpg" alt="Featured Image" /></div>

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Don’t Close the Deal Without an IP Check

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