IP diligence should trace the creation, assignment, licence and encumbrance history of the material assets. Review employees, founders, contractors, collaborators and acquired components separately. Identify gaps that require remediation or transaction protection; a general warranty of ownership does not establish the chain of title.
The business situation
A software business has a working product and a registered company. Early code was written by a founder before incorporation, later modules by freelancers, and third-party libraries were added without a licence inventory. The buyer needs to know which rights actually sit in the target.
The diligence question is not merely whether a defect exists. It is whether the defect changes value, transaction structure, conditions to closing or the buyer's ability to operate the business. A share acquisition, business transfer and asset purchase allocate rights and liabilities differently.
What needs examining
01. Map the asset and its contributors
Identify source code, brands, designs, datasets, documentation and confidential know-how material to the transaction. Establish who created each asset, in what relationship and under which governing law. Employee and independent-contractor rules can differ. The repository's current account owner does not prove legal ownership of every contribution.
02. Review assignments and third-party conditions
Check executed instruments, scope, rights covered and any statutory requirements. Identify licences, open-source conditions, joint ownership and security interests. Consider whether an assignment covers later work or only a defined deliverable. A complete review distinguishes ownership from a licence adequate for current operations but insufficient for the buyer's planned use.
03. Choose a practical remediation route
Where possible, obtain valid assignments, consents or licence clarifications before closing. Assess whether a missing contributor can be found and whether replacement is realistic. Connect unresolved issues to valuation, conditions, warranties and indemnities. Avoid presenting remediation as certain where a third party controls the necessary right.
Law, contract and recommended practice
The Companies Act, 2013, contract law and transaction-specific tax, competition, foreign-exchange, employment and sector requirements may apply. Approval and filing obligations should be checked against the actual parties, structure and thresholds, rather than inferred from the transaction's headline value.
Connect the control to the evidence
Use this table to scope the review. The legal basis and the practical control are identified separately.
| Obligation or objective | Practical control | Evidence to retain |
|---|---|---|
| Legal assessment Establish title or sufficient permitted use | Contributor and instrument review | Executed assignments and licences |
| Contractual control Address transaction-specific rights | Change-of-control and planned-use analysis | Consent or amendment record |
| Recommended practice Track unresolved title defects | Asset-specific remediation plan | Gap register and closing evidence |
Records to prepare
Bring the complete, current record to the review. Preserve earlier versions where a change or disputed event makes them relevant.
Common questions
Does paying a freelancer automatically transfer all IP?
Do not assume so. Review the applicable law, nature of the work and executed terms. Payment and ownership are separate issues that need a clear legal basis.
Is source-code access enough for a buyer?
No. Access may enable use without establishing ownership or the rights needed for modification, distribution or transfer. Trace the legal rights alongside technical access.
Prioritise the assets that drive the acquisition's value. For each, identify the owner, permitted uses, restrictions and the document that proves the position.
Legislation & official resources
These references identify the governing frameworks. Confirm the current text, relevant amendments and applicable judicial position for the matter.
- Companies Act, 2013 — official legislative portalIndia Code · Government of India · Locate the current Act and applicable rules on India Code. Company category, exemptions and amendments matter.
- Indian Contract Act, 1872Government of Uttar Pradesh · Commercial Tax Department · Government-hosted statutory reference. Read with applicable amendments, special law and judicial interpretation.
- Master Direction — Foreign Investment in IndiaReserve Bank of India · Official direction, displayed as updated to 15 June 2026 when reviewed. Read with the NDI Rules and applicable sector policy.
This note is general information. The scenario is hypothetical and does not describe a client matter. The legal result depends on the facts, documents, jurisdiction and operative law. No individual lawyer review is represented by the preparation date.
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