What to do next
Verify chain of title for every material asset
Registered rights should be traced from creation through every assignment to the current owner, with recordals confirmed at the relevant office. For unregistered assets - code, designs, content - confirm assignments exist from every employee, contractor and founder who created them.
Check open source and third-party dependencies
Copyleft licences can carry obligations affecting proprietary code, and dependency licences are frequently untracked. A software bill of materials, or at minimum a dependency licence audit, is now standard on any technology transaction.
Review inbound and outbound licences for change-of-control
Licences the company depends on may terminate or require consent on a change of control, and outbound licences may constrain what an acquirer can do. Both are found in the contract, not in the IP register, and both routinely surface late.
Look for encumbrances, disputes and deadlines
Security interests over IP, pending oppositions or challenges, live infringement claims either direction, and renewal or maintenance deadlines falling shortly after closing. A lapsed registration discovered post-closing is an avoidable loss.
What to prepare
A schedule of registered rights with numbers and status, assignment and employment agreements, contractor agreements with IP clauses, licences in and out, open source inventory, any disputes or demand letters, and evidence of use for trademarks. Sellers who prepare this before going to market close faster and at better terms.
Possible pathways where a problem is found
Confirmatory assignments before signing, a specific indemnity for the identified risk, a purchase price adjustment or escrow, representation and warranty insurance, or a condition requiring the gap to be closed before completion. Which is appropriate depends on whether the gap can actually be cured.
Frequently asked questions
What is the most common IP problem in diligence?
Chain of title - contractor or founder work with no written assignment. It is extremely common and almost always fixable, just expensive under deal pressure.
Why does open source matter?
Copyleft licences can impose obligations on proprietary code, and untracked dependencies make the position unknowable. Acquirers increasingly require a dependency licence audit.
Can a problem be fixed during the transaction?
Often, through confirmatory assignments, a specific indemnity, escrow or a completion condition. Whether it is curable depends on whether the person who must sign is still cooperative.
Should sellers do their own diligence first?
Yes. Finding and fixing gaps before going to market avoids price adjustments and delay, and sellers who prepare the schedule in advance close faster.
Does R&W insurance cover IP gaps?
Sometimes, though known issues are typically excluded - which is precisely why identifying them early matters. Notify insurers promptly where a policy exists.
This is general information, not legal advice. Laws vary by location and every situation is different — speak with a qualified lawyer about your specific circumstances.