India’s merger and acquisition landscape has undergone a dramatic transformation. What was once primarily a financial and operational exercise has evolved into a multifaceted evaluation where intellectual property assets frequently determine deal outcomes. As India positions itself as the world’s third-largest economy with GDP projections reaching $7.3 trillion by 2030, the sophistication of transactional analysis has intensified correspondingly. In this environment, partnering with an experienced intellectual property law firm has become not merely advisable but essential for navigating the complexities of modern M&A transactions.
Recent data reveals the magnitude of this shift: India witnessed 1,281 M&A transactions in 2025, with Energy, Resources & Industrials alone accounting for over $49 billion in deal values. Consumer sector transactions exceeded $26 billion, while life sciences and healthcare maintained robust activity. Yet beneath these impressive figures lies a critical reality—between 70% and 75% of M&A deals fail due to inadequate pre-deal analysis and misaligned objectives. Intellectual property issues constitute a significant portion of these failures, making comprehensive IP due diligence the difference between successful value creation and costly transaction collapse.
The Changing Face of Value: Why IP Assets Now Dominate Deal Conversations
The composition of corporate value has shifted dramatically over the past two decades. Intangible assets, primarily intellectual property rights, now comprise 90% of the value of companies in the S&P 500, with global intangible asset values exceeding $62 trillion. For Indian companies seeking investment or acquisition, this global trend translates into heightened scrutiny from both domestic and international investors who increasingly view IP portfolios as the primary indicators of sustainable competitive advantage.
Consider the technology sector, where a single product might incorporate hundreds of patents, copyrights, and trade secrets. When Johnson & Johnson acquired Shockwave Medical for $13.1 billion in 2024, the deal’s success hinged on extensive intellectual property due diligence spanning the target’s innovative intravascular lithotripsy technology portfolio. Similarly, Cisco’s $28 billion acquisition of Splunk was driven largely by Splunk’s sophisticated data analytics technology capable of enhancing Cisco’s security infrastructure. These transactions underscore a fundamental truth: in knowledge-driven industries, IP assets are not ancillary considerations—they are the transaction itself.
For Indian startups and mid-market companies, this reality creates both opportunity and vulnerability. Venture capital funding in India rebounded to $13.7 billion in 2024, representing a 1.4x increase over 2023 levels, with deal volumes surging approximately 45%. Deep-tech and IP-focused funds like Bharat Innovation Fund and Endiya Partners have gained prominence, specifically targeting companies with significant intellectual property moats. However, this influx of capital comes with intensified due diligence expectations. Investors now routinely demand comprehensive IP audits, compliance certificates, and clear chain-of-title documentation before committing capital.
The Hidden Deal-Breakers: IP Issues That Derail Transactions
An intellectual property law firm specializing in M&A transactions encounters recurring patterns of IP defects that surface during due diligence. These issues, often invisible to company management, can fundamentally alter deal dynamics or cause transactions to collapse entirely.
Ownership Uncertainty: The Assignment Agreement Gap
One of the most prevalent and damaging issues involves unclear ownership of intellectual property created by employees, founders, contractors, and consultants. Under Indian copyright law, particularly Section 17 of the Copyright Act, 1957, ownership of works created in the course of employment must be explicitly addressed through assignment agreements. Unlike jurisdictions with “work-for-hire” doctrines that automatically vest certain IP rights in employers, Indian law requires express contractual transfers.
Technology companies frequently discover during due diligence that their software code, algorithms, and technical documentation lack proper assignment documentation. When freelance developers, early contractors, or even founding team members have not executed comprehensive IP assignment agreements, the company’s ability to enforce, license, or sell those assets becomes legally questionable. Acquirers respond to such gaps by demanding steep indemnities, insisting on purchase price holdbacks, or in severe cases, withdrawing from transactions entirely.
The problem extends beyond software. Design firms may lack proper assignments from graphic designers and UX specialists. Manufacturing companies may not have secured patent assignments from engineers and product developers. Content-driven businesses may face uncertainty around copyright ownership in their core creative assets. Each gap represents potential litigation risk and diminishes the asset’s commercial value.
Open Source Software: The Compliance Blindspot
With 87% of Indian product companies using open source software in their technology stack, and 96% of codebases containing open source components globally, open source compliance has emerged as a critical M&A risk area. A recent survey revealed that 42% of Indian tech firms have faced legal notices due to open source software violations, with penalties reaching ₹50 lakhs or more in some instances.
The complexity stems from the diversity of open source licenses. Permissive licenses like MIT and Apache 2.0 carry minimal restrictions, while copyleft licenses such as GNU General Public License (GPL) contain reciprocity obligations requiring that modified code be released under the same terms. GPL violations can mandate disclosure of proprietary source code or restrict commercial distribution—outcomes that fundamentally undermine a software company’s business model.
During M&A transactions, 68% of acquisitions now include dedicated open source software compliance audits. A Pune-based IoT startup reportedly lost a $2 million funding round when investors discovered GPL violations in the company’s codebase during due diligence. The incident illustrates how technical compliance failures translate directly into lost business opportunities and decreased valuations.
Sophisticated intellectual property law firms address this risk by implementing software composition analysis (SCA) tools that scan entire codebases, identify open source components, flag license conflicts, and detect known security vulnerabilities. These analyses, conducted proactively before fundraising or M&A discussions begin, enable companies to remediate violations, implement proper attribution, and demonstrate robust governance to prospective investors.
Trademark Vulnerabilities: Brand Protection Gaps
Consumer-facing businesses derive substantial value from brand recognition and goodwill. However, many companies fail to maintain adequate trademark protection, creating significant vulnerabilities during M&A transactions. Common issues include:
- Unregistered trademarks: Companies using marks in commerce without filing for registration forfeit statutory protection and enforcement rights
- Expired registrations: Failure to file renewal applications within prescribed timelines results in mark removal from the registry, making the brand available for third-party appropriation
- Inadequate class coverage: Registrations that don’t cover all relevant product or service categories leave gaps in protection
- Pending oppositions: Unresolved challenges to trademark applications create uncertainty about final registration
Under the Trade Marks Act, 1999, trademark registrations in India remain valid for ten years and must be renewed before expiration. Companies can file renewal applications (Form TM-R) up to six months before the expiration date. A grace period of six months after expiration allows late renewals with additional surcharges. However, failure to renew within this one-year window results in removal from the register, terminating statutory protection.
During due diligence, acquirers meticulously review trademark status, renewal history, and opposition proceedings. Gaps in protection directly impact corporate valuation because the acquirer may face significant expenses in rebranding, re-filing applications, or litigating disputes. An intellectual property law firm can implement automated renewal calendars and proactive monitoring systems to prevent such lapses, ensuring ongoing compliance and maximum brand protection.
Undisclosed Disputes and Litigation Risk
Pending or threatened IP litigation significantly impacts transaction viability. Disputes over trademark infringement, patent validity, copyright ownership, or domain name conflicts create immediate concerns about asset usability and potential financial exposure. Unlike some jurisdictions where court filings are publicly accessible, many IP disputes in India remain non-public until advanced stages, making comprehensive disclosure by the target company essential.
Acquirers view undisclosed IP disputes as indicators of weak governance and lack of transparency. Even pre-litigation notices, cease-and-desist letters, or takedown requests under the Copyright Act require disclosure and evaluation. The potential for injunctions, damages, or restrictions on core asset usage can fundamentally alter deal economics or justify transaction termination.
Building Transaction-Ready IP Infrastructure: The Governance Framework
Forward-thinking companies no longer wait until potential investors or acquirers appear before addressing IP governance. Instead, they embed comprehensive IP management practices into their corporate governance structures, ensuring perpetual due diligence readiness.
Centralized IP Repository Development
The foundation of strong IP governance is a centralized, continuously updated repository containing:
- Registration documentation: Trademark, patent, copyright, and design certificates with current status verification
- Assignment agreements: Comprehensive employee, consultant, contractor, and founder IP assignment deeds
- Licensing agreements: Inbound and outbound licenses with transferability provisions clearly documented
- Renewal records: Payment receipts, annuity confirmations, and maintenance fee documentation
- Source code documentation: Software ownership records, development histories, and open source component manifests
- Dispute history: Complete records of opposition proceedings, infringement claims, settlement agreements, and ongoing litigation
This repository should not exist as a static document collection but as a dynamic system with automated alerts for renewal deadlines, opposition response timelines, and compliance obligations. Leading intellectual property law firms deploy specialized IP management platforms that integrate with corporate governance systems, ensuring real-time compliance tracking and immediate response capabilities.
Employment and Contractor Documentation Alignment
Every individual who creates potentially protectable intellectual property for the company must execute agreements containing explicit IP assignment clauses, confidentiality obligations, and appropriately scoped non-compete provisions. These agreements should:
- Use present-tense assignment language that effectuates immediate transfer rather than mere promises to assign in the future
- Cover all categories of IP including inventions, works of authorship, trade secrets, and improvements
- Address moral rights explicitly, particularly for copyright materials
- Comply with jurisdiction-specific requirements, recognizing that concepts like “work-for-hire” vary across countries
- Include obligations extending beyond termination of the relationship
During M&A legal due diligence, acquirers scrutinize these agreements intensively. Missing or improperly drafted assignment clauses raise immediate red flags, potentially triggering renegotiations or deal delays while remediation efforts proceed.
Proactive Monitoring and Enforcement Programs
Passive IP ownership provides limited competitive advantage. Companies must actively monitor the marketplace for potential infringement and respond appropriately when violations occur. Effective monitoring programs include:
- Trademark watch services: Regular surveillance of trademark journals, competitor filings, domain name registrations, and social media platforms
- Patent landscape monitoring: Tracking competitor patent applications and freedom-to-operate assessments
- Online marketplace monitoring: Identifying counterfeit products and unauthorized sellers on e-commerce platforms
- Copyright infringement detection: Using digital fingerprinting and content matching technologies to identify unauthorized use
Investors favor portfolios demonstrating active protection and enforcement. A well-documented history of responding to infringement builds credibility and demonstrates that management understands the strategic importance of IP assets. An intellectual property law firm can design and implement cost-effective monitoring programs scaled to company size and risk profile.
Transaction Simulation Audits
One of the most valuable preparatory exercises involves conducting internal “mock due diligence” reviews that simulate the scrutiny an actual investor or acquirer would apply. These transaction simulation audits:
- Identify missing documentation before external parties discover gaps
- Reveal inconsistencies in ownership records requiring remediation
- Highlight compliance lapses demanding immediate attention
- Test the accessibility and organization of IP documentation
- Train internal teams on due diligence response protocols
Companies completing simulation audits well before actual fundraising or M&A discussions report significantly smoother transaction processes, reduced due diligence timelines, and stronger negotiating positions when issues do arise.
The Role of Specialized Intellectual Property Law Firms in Modern M&A
The increasing complexity of IP due diligence has elevated the importance of engaging specialized legal counsel early in transaction planning. While general corporate counsel provides valuable guidance on many transactional aspects, IP-specific expertise has become indispensable for several reasons.
Multijurisdictional Complexity
For companies with international operations or aspirations, understanding how IP rights operate across jurisdictions requires specialized knowledge. Canada lacks a “work-for-hire” concept and maintains strong moral rights protections. India handles software IP exclusively through copyright rather than patent protection in many contexts. The United States provides broad software patentability. China mandates technology transfer agreements for certain transactions. Each jurisdiction’s unique framework affects ownership, enforceability, and valuation.
An intellectual property law firm with cross-border capabilities can navigate these variations, ensuring that due diligence examines IP assets under the correct legal frameworks and that acquisition structures protect value regardless of where assets are located or deployed.
Technical-Legal Integration
Effective IP due diligence requires more than legal analysis—it demands technical understanding of the underlying innovations. Patent attorneys with scientific or engineering backgrounds can evaluate whether patent claims actually protect the technology being commercialized. Trademark lawyers with brand strategy expertise can assess whether registrations cover all relevant market segments. Copyright specialists familiar with software development can identify gaps in code ownership documentation.
Leading intellectual property law firms assemble interdisciplinary teams combining legal expertise with technical knowledge, enabling comprehensive assessments that purely legal or purely technical reviews cannot achieve.
Regulatory and Compliance Navigation
India’s IP framework spans multiple statutes: the Patents Act, 1970; Trade Marks Act, 1999; Copyright Act, 1957; Designs Act, 2000; and Geographical Indications Act, 1999. Each statute imposes distinct procedural requirements, renewal obligations, and compliance standards.
Additionally, regulatory bodies like the Securities and Exchange Board of India (SEBI) mandate specific IP disclosures for companies pursuing IPOs or follow-on offerings. The Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 enable border protection but require proactive recordation with customs authorities. Navigating this regulatory complexity while ensuring ongoing compliance demands specialized expertise that general corporate counsel often lacks.
Risk Mitigation and Deal Structuring
When due diligence reveals IP defects, experienced IP counsel can structure solutions that enable transactions to proceed while appropriately allocating risk. Options include:
- Escrow arrangements: Holding back portions of purchase price pending remediation of identified issues
- Indemnification provisions: Contractual protections against specific IP-related liabilities
- Representation and warranty insurance: Third-party insurance coverage for IP breaches
- Remediation protocols: Post-closing obligations to cure ownership defects or compliance gaps
- Valuation adjustments: Price reductions reflecting diminished IP asset value
An intellectual property law firm skilled in transaction structuring can preserve deal momentum even when diligence identifies problems, ensuring that remediable issues don’t become deal-breakers.
Emerging Trends Reshaping IP Due Diligence in India
As India’s innovation economy matures, several trends are influencing how companies and investors approach IP due diligence:
AI and Technology-Driven Analysis
Artificial intelligence is transforming due diligence processes. Machine learning algorithms now analyze patent portfolios for strength and enforceability, identify licensing risks in software codebases, and flag potential trademark conflicts across global databases. These technologies enable more comprehensive reviews in compressed timelines while reducing costs.
However, AI-powered tools also introduce new risks. GitHub Copilot and similar coding assistants have sparked lawsuits alleging copyright violations and licensing breaches. Companies using AI-generated code must carefully document sources and licenses to avoid future disputes. Intellectual property law firms increasingly help clients implement AI governance frameworks that capture the benefits of automation while managing associated risks.
Deep Tech and IP-Focused Investment Growth
India’s venture capital ecosystem has witnessed the rise of deep-tech and IP-focused funds. Bharat Innovation Fund, launched in 2018, specifically targets early-stage companies with strong intellectual property foundations. Endiya Partners has carved a niche backing product startups with significant IP moats in semiconductors, SaaS, and MedTech sectors.
This trend reflects investor recognition that sustainable competitive advantages increasingly derive from proprietary technology, unique algorithms, and patented innovations rather than mere execution capability. Companies positioning themselves for such investments must demonstrate not only IP ownership but also strategic IP development aligned with market opportunities.
Cross-Border M&A Sophistication
Foreign acquirers, particularly from the United States, Europe, and Japan, bring mature IP due diligence expectations to Indian transactions. These buyers expect comprehensive freedom-to-operate analyses, detailed patent landscape assessments, and robust enforcement histories. Indian companies pursuing cross-border exits must meet these elevated standards, often requiring substantial preparatory work to align local practices with international expectations.
The flip side creates opportunity: Indian companies with well-managed IP portfolios can command premium valuations from foreign buyers seeking to acquire technology, brands, or market access that strong IP rights uniquely provide.
Regulatory Evolution and Enforcement Strengthening
India’s IP infrastructure continues to mature. High Courts in Karnataka, Calcutta, and Himachal Pradesh have established dedicated Intellectual Property Divisions to enhance efficiency in IP dispute resolution. The government has eliminated the angel tax, reduced long-term capital gains tax rates, and simplified foreign venture capital investor registrations—reforms signaling strong support for the startup ecosystem.
These developments create both opportunities and obligations. Improved enforcement mechanisms mean IP rights carry greater value, but also that infringement carries heightened risk. Companies must adapt their governance practices to this evolving landscape, ensuring compliance with emerging standards while capitalizing on strengthened protection mechanisms.
Conclusion: The Competitive Advantage of Proactive IP Governance
In India’s rapidly evolving M&A landscape, intellectual property has transcended its historical role as a legal formality to become a central determinant of transaction success. Companies that embed comprehensive IP governance into their corporate cultures—maintaining robust documentation, ensuring ongoing compliance, actively monitoring and enforcing rights, and conducting periodic self-audits—consistently achieve superior transaction outcomes.
The data supports this conclusion unequivocally. Well-prepared companies complete due diligence faster, negotiate from positions of strength, command higher valuations, and avoid the costly delays and renegotiations that plague transactions where IP defects surface late in the process. Conversely, companies treating IP as an afterthought face valuation discounts, increased indemnity exposure, and in severe cases, deal termination.
As India continues its trajectory toward becoming the world’s third-largest economy, with venture capital funding reaching record levels and M&A activity maintaining robust momentum, the importance of partnering with an experienced intellectual property law firm will only intensify. These specialized advisors provide not merely legal services but strategic counsel that transforms IP assets from potential liabilities into powerful value drivers.
For companies preparing for fundraising, planning eventual exits, or simply building sustainable competitive moats, the message is clear: proactive IP governance, guided by specialized expertise, has become not an optional enhancement but a fundamental requirement for success in India’s innovation-driven economy. The question is no longer whether to invest in comprehensive IP management, but rather how quickly organizations can implement the frameworks that will position them for optimal outcomes in an increasingly IP-centric marketplace.
