USE CASE · U.S. INVESTOR DUE DILIGENCE
U.S. Investor Due Diligence + IP Ownership Review
For technology-oriented startups, the question of who actually owns the core technology is regularly one of the most important issues in an investor’s due diligence process. U.S. investors want to be able to verify whether patents, software, know-how, and other intellectual property rights are effectively held by the company and whether third parties have any rights to them.
We prepare companies for legal and IP due diligence by a U.S. investor. The focus is on the chain of title from founders, employees, freelancers, universities, and collaboration partners all the way to the current company.
The Case at a Glance
Background
A U.S. investor begins the due diligence process or requests documentation regarding the IP portfolio and the chain of title.
Objective
Reliably assess IP ownership, key contracts, and identifiable gaps prior to the investor Q&A.
Support
German-speaking contacts coordinate the IP review, the data room, and responses to investor questions with the relevant teams.
Your Situation
IP issues often have historical roots. The first prototype was developed before the company was founded; a freelancer wrote parts of the code; or core expertise originated from a university or research collaboration. Such situations can lead to gaps in the chain of title if transfers or licenses are not fully documented.
For software companies, open-source components and the rights of external developers are additional considerations. For deep-tech and life-science companies, the focus is often on employee inventions, research projects, inventor rights, and university licenses.
Our Support
We conduct a focused IP ownership review and verify which documents actually substantiate the chain of title. Missing assignments, unclear licensing rights, or other issues are prioritized and—to the extent possible—resolved before or during the due diligence process.
The results will be structured so that they can be used for the data room and investor Q&A. For patent-driven companies, we can combine the ownership review with an assessment of the patent portfolio and the U.S. IP strategy.
Review the IP chain of title prior to investor due diligence
Please provide us with details on your current funding status, core technology, and the intellectual property rights you have established to date. We will determine which documents are needed for a targeted ownership review.
Preparing IP Ownership for Investor Due Diligence
The scope of the review depends on the technology, its development history, and the investor’s specific questions. Typical areas of focus include the following.
Founder, Employee, and Contractor IP
Document the chain of title from the time of creation to the company.
Core technology is often developed by founders, employees, or external developers. We verify whether relevant inventions, software, and other work products have been effectively assigned to the company and whether the necessary documents are in place.
In the case of employee inventions in Germany, we take the specific legal provisions into account; for freelancers and consultants, it generally depends on the specific terms of the contractual assignment of rights.
Patents, Software, and Open Source
Consider formal ownership and technical dependencies together.
For patents and patent applications, we review ownership, assignments, and portfolio structure. For software, we focus on source code rights, external contributions, and open-source components.
The goal is not to conduct an abstract, comprehensive review of all technical assets, but rather to identify the issues that may be material to the investor or that require a clear explanation in the data room.
Universities, Spin-offs, and Collaborations
Clarify background IP, licenses, and future developments early on.
In the case of spin-offs or research collaborations, core intellectual property may be held by a university, a research institute, or a collaboration partner. In such cases, exclusivity, fields of use, sublicensing, further developments, and publication rights are particularly relevant.
We review the key licensing and cooperation agreements and determine which rights are actually available to the company for its business model and a future transaction.
Data Room, Remediation, and Investor Q&A
Systematically address and explain any gaps that are identified.
An ownership review should do more than just identify problems. Where necessary, missing assignments can be completed, gaps in documentation can be filled, or outstanding licensing issues can be resolved.
We also provide support in the structured preparation of documents and in responding to IP-related questions from the investor or its U.S. attorneys.
Your Contacts
Dr. Raphael Tautz and Matthias Schuhmacher coordinate German-language client support and bring together expertise in patents, technology, and transactions. Depending on the area of focus, the appropriate members of the U.S. Corporate and IP practices are brought in.
Partner · STEM Practice Group
Your contact in Munich
Partner · STEM Practice Group
Your contact in Munich
Frequently Asked Questions
Typically, the review involves determining which intellectual property rights are essential to the business model, who owns them, how they came to be held by the company, and whether third parties have any rights to them.
Code, prototypes, or inventions may have been created before the company was incorporated. Without a clear assignment of rights, a gap in the chain of title may become apparent during the due diligence process.
That should not be assumed. The scope of the rights depends on the applicable law and the specific terms of the contract. Contractor agreements and IP assignments are therefore reviewed on a regular basis.
Core IP may be owned by the university and merely licensed out. In such cases, exclusivity, field of use, sublicensing, further developments, and how the IP is handled in the event of financing or an exit are particularly relevant.
Yes. Even if not every historical gap can be fully resolved immediately, outstanding issues can be prioritized and often documented or addressed even before the investor Q&A.
Additional Information
U.S. Investor Term Sheet
Review the financial and compliance-related terms of a U.S. financing round.
Intellectual Property
Provide strategic management of patents, software, and other intellectual property rights.
Primary Sources / Legal Bases
Selection of primary and original sources particularly relevant to this use case:
- 35 U.S.C. § 261 – Ownership; Assignment – Primary U.S. law governing the assignment of U.S. patents and patent applications.
- U.S. Copyright Act, 17 U.S.C. §§ 201 and 204 – Primary legislation governing copyright ownership, works made for hire, and written assignment of rights.
- Employee Invention Act (ArbnErfG) – The primary German source on employee inventions, particularly Sections 5 through 7 and Section 42.
- § 69b UrhG – Authors in Employment and Service Relationships – German Primary Source for Computer Programs.
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English (UK)