Confirming what is being transferred
The first question in any intellectual property transaction is whether the seller actually owns what it is selling. Inventions made by employees, and copyrighted work made by outside contractors, may still belong to the individuals if assignments were never signed; work made for hire covers fewer situations than people assume, so most outside work needs a written assignment. Trademarks are tied to the goodwill of the business, and assigning a mark without that goodwill can undermine it. A pending trademark application based on intent to use generally cannot be assigned before use is shown, except together with the relevant business. Search the USPTO and Copyright Office records, but remember that unrecorded transfers and licenses may exist.
Licenses and encumbrances
Existing licenses can sharply limit what a buyer receives. An exclusive license granted long ago may keep the buyer out of a key market, and some licenses cannot be transferred without the licensor's consent. Security interests held by lenders, open-source components in software, government rights in inventions developed with federal funding, and pending disputes all affect value. Collect the chain of title, assignment agreements, license agreements, maintenance and renewal records, and any litigation or demand letters involving the assets. Missing paperwork is common in smaller companies and is better found before signing than after.
Structuring the deal
Whether to structure the transaction as an assignment, an exclusive license, or a license with an option affects tax treatment, control, and who can enforce the rights. Representations, warranties, indemnities, and escrow can allocate the risk of title gaps or later infringement claims. After closing, recording assignments with the USPTO and the Copyright Office helps protect the buyer against later conflicting transfers. We begin by understanding what the buyer needs to do with the intellectual property, then focus diligence and drafting on the rights that support that use. Tax and accounting advisors should see the structure early, since the same transfer can be taxed very differently depending on its form.
