Is your IP ready to face public markets? Excel V. Dyquiangco discusses how an early IP strategy helps companies avoid legal risks, satisfy regulators and win investors’ trust during an initial public offering. 

 

An initial public offering (IPO) is more than just a fundraising milestone – it’s a profound catalyst for a company’s intellectual property strategy. While often viewed as a secure capital for innovation, the IPO process inherently demands that companies systemize and scale their IP efforts. This rigorous journey transforms legal safeguards into measurable competitive assets, significantly enhancing investor appeal and market differentiation. 

The stringent due diligence preceding an IPO forces companies to audit their IP portfolios meticulously. This intense scrutiny goes beyond mere identification, compelling a deep evaluation of each asset’s strength, enforceability and strategic alignment. This active assessment ensures that IP is not just protected but is also a cornerstone of the company’s future business objectives. 

Ultimately, the transparency and demands of the IPO journey compel companies to weave their IP strategy directly into their core business model. A well-articulated and strategically managed IP portfolio becomes a powerful signal to investors, showcasing not only the company’s innovative capacity but also its sustainable competitive advantages and long-term growth potential in a competitive landscape. 

“During an IPO application process, be it in Hong Kong or elsewhere, sponsors and the listing applicants are often required to conduct thorough due diligence on the IP assets of the listing applicant, including patents, trademarks, copyrights and trade secrets, covering verification of ownership, validity of licences and any potential encumbrances of such IP rights,” said Eliza Siew, a partner at Deacons in Hong Kong. “For example, the listing rules of the Hong Kong Stock Exchange require disclosure of a listing application’s assets – including IP assets – and the risks associated with such assets in the prospectus.”  

“As an illustration, we are asked to conduct due diligence on the titles, ownership and/or validity of exclusive licences of patent registrations or applications for a tech-intensive listing applicant, or a chain of title enquiry relating to several famous cartoon series for a listing applicant,” she added. “These processes often uncover gaps in the IP portfolio that should be addressed before the listing.  We would advise the listing applicants to sign proper documentation to plug the gaps and to avoid any potential issues.” 

She noted that these are not just legal safeguards for public investors. “Having legal advisors to conduct due diligence on the IP portfolio and having the assets and the associated risks properly disclosed on the prospective can be a cornerstone of a strong IPO. It can highlight to the investors how the IP assets owned by the listing applicant can provide competitive advantages to the business in the market and how it could develop future revenue streams. Hence, IP due diligence in the IPO process can turn legal safeguards into actual business and monetization opportunities,” she said.  

According to Madhu Rewari, a partner at Anand and Anand in Noida, this often leads to the streamlining of IP ownership under a single holding entity or parent company, ensuring clearer title and risk mitigation, particularly with respect to third-party claims or intra-group licensing inconsistencies.  

“Where IP assets are dispersed across various subsidiaries or sister entities, companies must establish formal inter-company licensing arrangements and consolidate ownership structures to prevent operational disruptions and clarify usage rights across the corporate group,” she said. 

“Strategically, the IPO presents an opportunity to reposition IP as a core business asset. By curating the portfolio to align with revenue drivers and market positioning, companies can highlight exclusivity, brand value and innovation pipelines to investors. Standardizing global filings, proactively addressing pending oppositions or invalidity threats, and articulating IP-backed barriers to entry in the prospectus all enhance valuation,” she explained. “In doing so, companies can convert IP from passive protection into measurable competitive capital demonstrated through licensing revenues, market share insulation, or freedom-to-operate clarity, thereby reinforcing long-term investor confidence.” 

Common pitfalls  

Siew observed that many companies start evaluating their IP portfolio relatively late in the IPO preparation process.   

“Whilst it is understandable that listing applicants often focus on the documentation in relation to business, turnovers and accounts, it is also important to ensure that a forward-looking and comprehensive IP strategy is in place, such as securing trade mark applications or registrations in advance in the jurisdictions where the company has been operating or plans to conduct business and to seek infringement risk analysis in relation to the listing company name and stock short name prior to the IPO application,” she said.   

While these things look minor, they could have a significant impact on the IPO process, Siew said, listing some cases where applicants’ names collided with the names of local businesses or a third-party trademark registered on the local trademark registry in respect of the same or similar goods or services.  

“Such third-party trademark and trade name could bring infringement or passing off risk to the listing applicant’s operation in Hong Kong that cannot be ignored – and this may delay the whole IPO process. Regulators may also raise queries in these circumstances,” said Siew.  

“Sometimes, the use of listing company name and the stock short name may even lead to costly and time-consuming infringement or passing off litigation,” she continued. “Indeed, we have acted for a China-based insurance and financial conglomerate dual-listed in Shanghai and Hong Kong in a long-running passing-off high court action against another Hong Kong-listed company in respect of the latter’s use of a listing company name and the stock short name, although the use of such confusing names commenced after the listing of the counter-party.”  

“We as IP advisors will have to come up with effective strategies well in time to deal with these obstacles in order not to delay the IPO process as far as possible. Such strategies vary depending on the circumstances. In a strong case, we will generally advise that the listing applicant may elect to threaten to sue; in a less clear case, we will sometimes advise the listing applicant to seek trademark co-existence with the other side. The strategy could be very fact-sensitive and would vary also depending on the client’s objective,” said Siew.  

She concluded: “In any event, it is advisable to start evaluating the IP portfolio and assessing infringement risks as soon as possible whenever a listing plan is on the agenda.”    

For Mudit Kaushik, a managing associate at Anand and Anand in Noida, one of the most common IP-related pitfalls in IPO preparation is inadequate due diligence, which can expose unresolved ownership disputes, incomplete patent coverage or gaps in trademark protection that deter investors or invite regulatory scrutiny.  

“Companies often fail to document IP assignments from employees or contractors, overlook freedom-to-operate risks or neglect to align IP protection with priority markets,” he said. “Undisclosed infringement claims or pending proceedings may also surface during diligence, creating unexpected liabilities. IP counsel can mitigate these risks by initiating comprehensive audits early in the process, ensuring clear chain-of-title documentation, validating the enforceability of core patents and assessing exposure to third-party challenges. Proactive measures include stress-testing the portfolio for litigation risk, securing timely registrations in key jurisdictions, and codifying trade secret protocols with enforceable internal policies.” 

He said that another critical oversight lies in failing to address legacy IP issues, such as lapsed patent families, abandoned applications or inconsistently enforced marks – all of which may signal poor asset stewardship to potential investors. 

“Outdated licensing terms or vague exclusivity clauses can further complicate valuation. IP lawyers should work closely with business leadership to streamline the portfolio, eliminate non-essential assets, resolve outstanding disputes and ensure that existing agreements reflect current commercial realities. Importantly, many of these course corrections require substantial lead time before an intended IPO. Early intervention allows legal teams to convert latent risks into investor-ready strengths, aligning the IP strategy with growth projections and positioning the portfolio as a quantifiable driver of enterprise value,” he said.  

IP strategies in IPO 

For Dewi Soeharto, a partner at Assegaf Hamzah & Partners in Jakarta, IP strategy systematization will turn conventional IP practices into manageable and auditable processes.  

“Companies must implement an IP governance framework, integrate IP with business units, document chain of title and assignment and also use standardized non-disclosure agreements and IP clauses in employee, vendor and partner agreements,” she said. 

“Scaling IP strategy involves aligning IP assets with business growth strategies,” she noted. “Companies can consider filing IP protections in key markets where the company plans to operate or sell products by prioritizing registrations in jurisdictions based on strategic importance and cost-benefit analysis. Companies can also consider expanding IP to cover new tech developments or pivotal areas.” 

“Systematization and scaling can transform intellectual property from a passive asset into an active driver of enterprise value. It can reduce legal and ownership risks. It can also enhance valuation by showcasing IP as a monetizable asset,” she said. 

Meanwhile, Siew expanded on the theme, listing additional IP strategies that companies can implement when preparing for an IPO.  

• Assess infringement risks or conduct freedom-to-operate analysis whenever launching a new product or entering a new market. 

• Implement internal IP management policies to establish standard operating procedures for identifying and protecting new IP, managing trade secrets and educating employees about the importance of IP. 

• Centralize and systemize contract management by using standard templates for agreements, such as proprietary information and inventions agreements, service agreements and non-disclosure agreements, which contain clear and robust IP protection and confidentiality clauses. 

• Conduct regular IP audits by making it a routine rather than a one-off event for the IPO. 

This is explained more by Rewari who said that a key step in this process is assessing whether core IP, particularly trademarks and patents, is adequately protected not only in India but also in key international markets where current or future operations, manufacturing, or sales are planned.  

“For established brands, companies should also evaluate eligibility for inclusion in the registrar’s list of well-known marks, as this designation strengthens enforcement capability and materially enhances perceived brand equity during valuation,” she said.  

“Scaling the IP strategy requires proactive alignment of filings with anticipated revenue streams and global expansion plans,” she added. “This includes strategic class selection and jurisdictional filings to support product diversification, the systematic elimination of low-value or non-core assets to optimize portfolio efficiency, and the development of monetization strategies such as licensing programmes and defensive filings. Companies should also conduct freedom-to-operate assessments aligned with their post-listing roadmap and establish IP development budgets tied to key business milestones. These systematization and scaling efforts translate into tangible investor value by demonstrating portfolio durability, operational scalability, and quantifiable competitive advantage. A structured, internationally coherent IP strategy signals management discipline and can enhance valuation multiples while reducing regulatory and competitive risks during the IPO process.” 

Kaushik added that a structured and scalable IP strategy is often a decisive factor in shaping investor confidence during an IPO.  

“Legal clarity over brand ownership, patent filings and licensing arrangements helps convey that the company has control over its intangible assets and is equipped to protect its market position. Investors also look for signs that the IP portfolio supports future growth, whether through international filings, enforceable rights across product categories or freedom from dependency on third-party ownership. Gaps in ownership or overlapping brand usage can dilute perceived value, create future legal exposure and complicate expansion plans,” he said.  

For instance, Cello World Limited – a well-known Indian consumer products company offering cookware, kitchen appliances, tableware and household goods – disclosed in its red herring prospectus that it does not own the trademarks for several of its flagship brands, including Cello. 

“This example illustrates the importance of securing clear legal ownership over brand assets. Doing so can materially strengthen a company’s market narrative, reduce legal uncertainty, and support a more confident valuation,” said Kaushik.