When acquiring a business that operates in China or owns Chinese trademark assets, proper IP due diligence is essential to avoid costly surprises.
Key Due Diligence Items
- Verify trademark registration status and validity
- Check for third-party claims, pending oppositions, or cancellations
- Review license agreements for quality control provisions
- Confirm proper use and maintenance of marks
- Assess non-use cancellation risk (3-year rule)
- Check for similar third-party marks that could limit enforcement
Assignment Requirements
Trademark assignments in China must be recorded with CNIPA. The assignment should cover all similar marks registered for similar goods/services to avoid “assignment in gross” issues.