IP Due Diligence Checklist for Cross-Border Business Sales (Canada-US)

General legal due diligence on a business acquisition already covers a lot of ground — corporate records, material contracts, employment, litigation, and more. Our complete legal checklist for buying a business in Ontario and the due diligence encyclopedia entry walk through that full process, and this article does not repeat it.

What deserves separate, focused attention is the intellectual property review when the deal crosses the Canada-US border. IP is often the least tangible and most misunderstood asset in a target business — a brand, a codebase, a customer-facing product built on trademarks and copyright that may or may not actually belong, cleanly, to the company being sold. Add a second country to the picture and the review gets more specific: a registration on one side of the border tells you very little about protection on the other side, and ownership gaps that would be manageable in a domestic deal can be harder to unwind once two legal systems are involved.

This is a procedural checklist — what to look for and ask about during the IP review of a cross-border acquisition. It does not offer conclusions about whether any particular registration, assignment, or licence is valid; that determination depends on the specific documents and facts, and it is exactly the work your acquisition counsel does during diligence itself.

Start with an inventory: every trademark, copyright, patent, domain name, and registered design the target claims to own, and in which country each registration sits. For a business operating on both sides of the border, do not assume that a mark shown as "registered" on a fact sheet is registered everywhere the business operates.

As we cover in Trademark Canada vs USA: What Businesses Need to Know, trademark rights are territorial. A registration with the Canadian Intellectual Property Office (CIPO) protects a mark in Canada; a registration with the United States Patent and Trademark Office (USPTO) protects it in the United States. Neither one reaches across the border on its own. A target that has sold into both countries for years but only ever registered its name in one of them is not unusual — and it is precisely the kind of gap a buyer needs identified and priced into the deal, not discovered after closing.

The checklist item is simple to state and easy to skip under deal pressure: pull the actual registration certificates or official search results for each mark and each country of claimed protection, rather than relying on the seller's summary of what it owns. Confirm that the owner of record matches the entity actually selling, and plan to record each assignment with CIPO and the USPTO after closing. In the US, an unrecorded trademark or patent assignment can be void against a later purchaser for value who had no notice unless it is recorded within three months, and an intent-to-use trademark application generally cannot be assigned before use is alleged unless the business it belongs to is transferred with it.

Not every valuable brand asset in a target business is registered at all. It is common — especially for businesses that grew organically rather than through a formal branding process — to find a product name, a tagline, or even the operating name of the company itself in active commercial use with no trademark registration behind it in either country.

That is not automatically fatal to the deal, since both Canada and the United States recognize some unregistered rights arising from use in commerce. But unregistered rights are inherently harder to define, harder to enforce, and easier for someone else to challenge or crowd out — particularly across a border, where the scope of any unregistered rights the target has actually built up in each country is a fact-specific question. The diligence task is to flag every material brand element in active use that lacks a corresponding registration, so the buyer and counsel can assess exposure on each one rather than assuming the brand is protected simply because the business has used it for years.

This is frequently where cross-border deals hit their most expensive surprise. Apart from some defaults — copyright in work an employee creates in the course of employment generally belongs to the employer — IP starts out owned by whoever created it, and it only becomes a company asset if it was properly assigned. Our founder's guide to protecting startup intellectual property walks through why this happens: contractors generally keep ownership of what they create unless they sign a written assignment, and early-stage work — code written before incorporation, a logo designed by a friend, a feature built by an early contractor who has since left — is exactly where assignment paperwork tends to go missing.

In a cross-border acquisition, the chain-of-title review needs to run through every person who touched the IP now being sold: founders, employees (in both countries, since the default employer-ownership rule is not identical everywhere), contractors, agencies, and any co-founder or early team member who is no longer with the company. For each one, the question is the same: is there a signed, written assignment in the file, and does it actually cover the specific IP at issue? A verbal understanding, an unsigned draft, or an assignment that only covers a single deliverable rather than the ongoing relationship are all common gaps that surface exactly when a deal is trying to close. On the Canadian side, also look for moral-rights waivers: under the Copyright Act, moral rights cannot be assigned, only waived, and an assignment of copyright does not by itself waive them.

Beyond confirming what is registered, look specifically for the mismatch pattern that shows up constantly in Canada-US deals: a mark, patent or design that is registered in the target's home country but was never filed on the other side of the border where the business also operates or plans to expand. Copyright works differently — it arises automatically in both countries under international treaties — but registration still matters: in the United States, a US work generally must be registered before its owner can sue for infringement.

This matters differently depending on which side of the deal you sit on. A Canadian buyer acquiring a business with real US revenue needs to know whether the brand it is buying has any registered protection in the United States, or whether it would be building US market presence on an unregistered name. A US buyer acquiring a Canadian target faces the mirror version. Either way, the gap itself is not necessarily a reason to walk away from the deal — plenty of businesses operate for years on unregistered or partially registered marks — but it is a fact that should shape price, post-closing plans, and how quickly the buyer moves to file in the country where protection is missing.

If the target licenses IP to or from another party — a franchise-style trademark licence, a software licence, a distribution arrangement tied to a brand — those agreements need a specific read: what happens to the licence when ownership of the target changes?

Many licensing agreements include change-of-control provisions that can trigger a right to terminate, a consent requirement, or renegotiated terms the moment the licensed party is acquired. In an asset sale the question is usually assignment rather than change of control: the licence has to move to the buyer, and anti-assignment clauses commonly require the counterparty's consent. A buyer who assumes a valuable licence will simply continue after closing can find, instead, that the counterparty has the right to end it — which is a materially different transaction than the one the buyer thought they were signing up for. Every IP licence the target is a party to, on either the licensor or licensee side, and in either country, belongs on the diligence list, read specifically for what closing the deal does to it.

The IP review does not happen in isolation — it feeds directly into the representations and warranties, the disclosure schedules, and in some cases the purchase price or holdback structure in the purchase agreement. What this checklist is not intended to do is replace the general due diligence process. Corporate records, material contracts, financial and tax review, employment matters, and the rest of a standard acquisition review are covered in our Ontario business acquisition checklist and the due diligence encyclopedia entry — read those alongside this one for the full picture.

What we have set out here is the IP-specific, cross-border layer: what to ask for, what gaps tend to hide, and where Canada-US deals in particular create risk that a purely domestic checklist would miss. At Lamba Law, our buying and selling a business work can include this kind of focused IP review as part of a cross-border acquisition, working alongside registered trademark agents and, where needed, US counsel on the filing side. This article is general information, not legal advice for your transaction — the right scope of IP diligence depends on the specific business, its history, and where it operates.