How do I do intellectual property due diligence when buying a business?

Intellectual property is often the part of a small business that a buyer pays for without being able to see it: the name customers know, the logo, the website content. Due diligence here means testing each claim of ownership against the public record and against the paperwork that made the seller the owner. Start with a written list of what the business says it owns.

Match the list to the register

Registered rights can be checked. The Canadian Intellectual Property Office says registering a trademark gives legal title to it, the way a deed gives title to real estate, so confirm that the seller or its corporation is the registered owner and that the name on the register matches the business. CIPO also notes that trade names can be recorded separately in each province under provincial legislation, so a provincial name registration does not prove a federal trademark.

Ask whether the mark is still in use

CIPO says an owner is responsible for using the trademark in Canada, and that a registration can be removed from the register if the mark goes unused for a long time. The Registrar can ask the owner for evidence of use in a section 45 proceeding. Ask the seller to show recent use of each registered mark, and ask for the renewal history, because a registration must be renewed to be maintained.

Separate what is owned from what is licensed

CIPO’s copyright guidance defines an assignment as the transfer of some or all of your rights, and a licence as permission to use a work under conditions while the owner keeps ownership. That distinction matters for a logo, photographs, software or website content made by a designer or contractor. If the business holds only a licence, the creator is still the owner and the licence terms may limit what you can do. Ask to see the written assignments or licences themselves.

Plan how the rights will move to you

Registered rights change hands through recorded documents. CIPO provides for the recordal of patent transfers, the registration of trademark ownership transfers and the registration of copyright assignments. Build the assignment documents into closing and diarize the filings afterwards. For the contract side, see who owns the intellectual property after a sale.