Due diligence

Typical areas

What are the typical areas of due diligence undertaken in your jurisdiction with respect to technology and intellectual property assets in technology M&A transactions? How is due diligence different for mergers or share acquisitions as compared to carveouts or asset purchases?

Due diligence should confirm the target company’s title to its main technological assets and whether they are subject to any outstanding dispute. The legal analysis of the ownership of intellectual property assets should include the review of the certificates of registration with INPI (if it is an industrial property) and assignment agreements (in contractor or employment agreements). The use of third-party intellectual property rights or open source software should also be reviewed since it may negatively affect or restrict ownership.

Carve-outs or asset purchases may depend on the conclusion of the transfer of intellectual property by INPI, if it is considered an industrial property. Trademarks have specific regulation that may restrict the ability to perform an asset purchase (eg, the purchaser must have a corporate purpose compatible with the activities to be performed under the trademarks).

Customary searches

What types of public searches are customarily performed when conducting technology M&A due diligence? What other types of publicly available information can be collected or reviewed in the conduct of technology M&A due diligence?

INPI’s public databases are usually searched for applications and certificate of registration of industrial property. Court records are also publicly available for verification whether the asset is subject to any legal disputes.

Although domain names are not strictly considered an asset under Brazilian law, due diligence process usually reviews the domain name registration at Registro.br (the agency responsible for registration of domain names in Brazil).

Registrable intellectual property

What types of intellectual property are registrable, what types of intellectual property are not, and what due diligence is typically undertaken with respect to each?

All types of intellectual property are registrable, although, the registration is not always necessary. Intellectual property is classified in two big groups: copyrights, whose registration is merely declaratory; and industrial property, whose registration is mandatory and necessary to ensure its ownership. It is worth noting that copyright falls upon artistic, literary and scientific creations in which protection is conferred to protect the author’s own personality, while industrial property rights, on the other hand, falls upon assets linked to corporate activity, such as trademarks, patents, industrial designs, integrated circuit topography and geographical indications.

In respect of copyright, the following actions are typically taken:

  • assessment on the process of creation and modification of the intellectual property used by the target to understand the ownership of assets;
  • analysis of the employment contracts with developers of intellectual property works searching for clauses that guarantee to the target the ownership of assets produced by its employees;
  • assessment on the ongoing legal disputes (if any); and
  • analysis of licensing and assignment agreements.

In respect of industrial property, the following actions are typically taken: (i) search on the public records of INPI to assess the ownership of assets; (ii) the ongoing legal disputes (if any); and (iii) analysis of licensing and assignment agreements.


Can liens or security interests be granted on intellectual property or technology assets, and if so, how do acquirers conduct due diligence on them?

Liens or security interests may be granted on intellectual property. The due diligence process may change slightly depending on the type of intellectual property, but generally should cover certificates of registration of the relevant intellectual property, which should evidence any liens and collateral agreements disclosed by the target company.

In terms of process for perfecting, recording liens or security interest over intellectual property, the general rule is that the collateral agreements must be filed with the registry of deeds and documents and with INPI, as the case may be.

Collateral agreements regarding copyright, software, trade secret and know-how, in particular, may face enforceability limitations as such rights may not be fully or precisely described in the financing agreements given their confidential status.

Release of liens and security interests on intellectual property follow the recording steps required for the perfection of the lien (ie, the relevant release instruments must be filed with the registry of deeds of documents and with the INPI, as applicable).

Employee IP due diligence

What due diligence is typically undertaken with respect to employee-created and contractor-created intellectual property and technology?

It is highly advisable to verify the agreements entered into by the target company and its employees and contractors that have developed or performed maintenance services of the technology (mainly the source code of a software). Lack of proper contractual protection over the intellectual property asset may trigger future legal disputes over the ownership of the asset and indemnification claims for undue use of third-party intellectual property rights.

Transferring licensed intellectual property

Are there any requirements to enable the transfer or assignment of licensed intellectual property and technology? Are exclusive and non-exclusive licences treated differently?

Transfer and assignment of industrial property are subject to registration with INPI. There is no difference in the legal treatment of exclusive or non-exclusive licences.

Software due diligence

What types of software due diligence is typically undertaken in your jurisdiction? Do targets customarily provide code scans for third-party or open source code?

To assess the unchallenged ownership of the software, due diligence typically covers:

  • review of developers’ agreements;
  • use of open source software and respective licences, since such licences may be subject to copyleft or somehow adversely affect the ownership of the software by the target;
  • use and integration with hired-party intellectual property and respective licences;
  • outbound licensing agreement; and
  • review and assessment of risk of loss of the legal disputes.

Code scans are usually recommended to be conducted by specialised technical companies.

Other due diligence

What are the additional areas of due diligence undertaken or unique legal considerations in your jurisdiction with respect to special or emerging technologies?

Due diligence covering legal aspects of special or emerging technologies is still quite unusual in Brazil.