Intellectual Property Due Diligence Checklist for Lenders

Purpose
Intellectual property (“IP”) is an important asset in many financing transactions, either because it is vital to the borrower’s business as a going concern or because it is a valuable and important component of the collateral pool in its own right. Conducting a thorough due diligence review of the borrower’s IP is critical to an accurate credit assessment of the borrower[1] and can affect the creation, perfection, and enforcement of a security interest obtained in the IP.[2]
This checklist outlines a range of potential due diligence steps relating to IP, provides guidance on how to perform them, and offers suggestions on how to address IP in the security agreement for the transaction. It is intended for use by a commercial finance lawyer who finds that IP is included in the collateral package, not necessarily for an IP professional. A sample security agreement containing provisions that deal with IP can be found in the Model Intellectual Property Security Agreement produced by a task force organized by the Commercial Finance and Uniform Commercial Code Committees of the American Bar Association Business Law Section.[3]
For the purposes of this checklist, assume th