NIGEL GORDON
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Intellectual Property Due Diligence When Buying a Business in Australia

Nigel Gordon·
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Intellectual property due diligence when buying a business in Australia means verifying that the seller actually owns the brand, systems, and creative assets you're paying for — and that they can legally transfer them to you on settlement day. It sounds obvious. You'd be surprised how often it isn't.

A broker told me about a deal last year where a buyer was three weeks from settlement on a $480,000 trades business when they discovered the business name and website domain were registered to the seller's wife — in her personal name, not the company. The entity being sold had been trading on assets it didn't technically own. It wasn't fraud, just sloppiness that had built up over 11 years of not thinking about it. But it nearly killed the deal and added two months and about $8,000 in legal fees to fix.

This is Module 5 territory — the part of due diligence for buying a small business that most buyers underweight because it feels abstract. It isn't abstract. The brand is often the most valuable thing you're buying.

What counts as intellectual property in a small business sale

For a trades or service business in the $200K–$600K price range, the relevant IP typically includes:

Business name and trademarks. The registered business name with ASIC (if any), any registered trademarks with IP Australia, and any unregistered marks the business has built a reputation around. These are not the same thing — a registered business name is just an administrative record; it doesn't give you exclusive rights to use the name commercially. Trademarks do.

Domain name and website. The domain is registered through a registrar (GoDaddy, Crazy Domains, Panthur, etc.) to a specific person or entity. Many small business owners registered the domain in their own name when they started and never transferred it. You might be buying a business whose website lives on a domain owned by a bloke who has since moved overseas.

Software and systems. Xero subscriptions, job management software (ServiceM8, simPRO, Tradify), quoting tools, and anything custom-built. Subscriptions don't transfer — they need to be cancelled and re-created. Custom software built by a contractor may not be owned by the business at all if the IP assignment agreement wasn't done properly.

Social media accounts and digital assets. Facebook page with 2,400 followers, Google Business Profile with 87 reviews — these are real commercial assets. Who's the admin? Are they still employed? What's the login? You want to walk into settlement owning the credentials, not chasing them down six weeks later.

Trade secrets and know-how. Pricing formulas, supplier relationships, customer lists, proprietary processes. These aren't registrable but they're still protectable — and the seller's restraint-of-trade clause needs to cover them explicitly.

How to check IP ownership before you commit

The main registers to check are straightforward. None of them require a lawyer (though you'll need one for the transfer).

IP Australia trademark register. Go to ipaustralia.gov.au and search for trademarks that match the business name or logo. Check what entity holds each registration and whether the registrations are current (not lapsed or pending renewal). A trademark registered to "John Smith" personally rather than "Smith Plumbing Pty Ltd" is a transfer issue.

ASIC business name register. Search on ASIC Connect. Again, note the holder. If the business name is held by a different entity to the one you're acquiring, it needs to be transferred as part of the sale.

Domain ownership. Use a WHOIS lookup tool (who.is or your registrar's lookup). If the registrant is an individual rather than the company, ask for a statutory declaration confirming they'll transfer it on settlement.

PPSR. The Personal Property Securities Register isn't strictly IP, but some IP licences and franchise agreements get registered there. Worth checking. (This is also where you find out if the business's plant and equipment is encumbered — covered separately in the plant and equipment due diligence checklist.)

The asset sale vs share sale distinction matters here

In an asset sale vs share sale, IP ownership behaves differently.

In a share sale, you're buying the company — so IP registered to the company stays with the company. The risk is that IP registered to individuals (the owners personally) doesn't come across automatically. You still need to check and transfer it.

In an asset sale (far more common for trades businesses), the IP must be explicitly listed in the sale agreement and transferred as a separate legal step. Your solicitor will typically prepare an IP assignment deed alongside the main sale and purchase agreement.

The catch: some IP can't be assigned without the original licensor's consent. If the business uses software under a commercial licence, that licence may have a "change of control" clause that voids it on assignment. The seller's accountant probably doesn't know this. You need to check the actual licence terms, not just assume it transfers.

What to ask in your due diligence information request

When you're building your due diligence request list (usually through a data room or structured email), include the following specific IP requests:

  • Copies of all registered trademark certificates and their current status
  • ASIC registration details for any business names used in trading
  • Domain registrar login details and registrant information for all domains
  • List of all software licences, subscriptions, and whether they're in the company name
  • Any IP assignment agreements with contractors or employees who created content, software, or systems for the business
  • Copies of any IP licences granted to or from third parties
  • Franchise agreement, if applicable, confirming rights to use the franchise brand

If the seller can't produce IP assignment agreements for work done by contractors, assume that contractor owns the IP unless proven otherwise. This is Australian copyright law: the creator owns copyright by default, not the person who paid for it, unless there's a written agreement to the contrary.

The hidden risk: IP held in a different entity

Here's the situation I see most often (and the broker I mentioned at the top has seen it plenty of times too).

The business trades as "XYZ Services." The operating company is XYZ Services Pty Ltd. But the domain was registered by the owner's family trust in 2009. The trademark was applied for by the owner personally because someone told him trademarks are personal property. The Facebook page is logged into the owner's Gmail account.

You're buying XYZ Services Pty Ltd. None of those assets are in XYZ Services Pty Ltd.

This isn't unusual and it isn't always sinister — small business owners don't think about entity structure when they're just trying to run a business. But it means your solicitor needs to prepare separate transfer documents for each asset, each counterparty needs to sign, and in the case of the trust, the trustee needs to formally resolve to transfer. That takes time and costs money.

Find out early. Ask directly in your preliminary due diligence questions: "Who is the registered owner of the business name, domain name, and any trademarks?" If the seller hesitates, that tells you something.

What a proper IP clause in the SPA looks like

Your legal due diligence when buying a business solicitor will handle the drafting, but you should understand what you're signing.

A well-drafted SPA will include:

  • A schedule listing all IP assets included in the sale
  • A warranty from the seller that they own (or have the right to transfer) all listed IP
  • A specific covenant to execute any additional transfer documents required post-settlement
  • A warranty that no IP is subject to any undisclosed licence, charge, or encumbrance
  • Restraint-of-trade clause covering trade secrets and know-how specifically

The warranty is important. If the seller warrants that they own the IP and it turns out they don't, you have a claim against them under the SPA. Without a specific IP warranty, you're limited to general misrepresentation remedies, which are harder to enforce.

What to do with the legal due diligence checklist

If you want a structured checklist covering IP alongside contracts, licences, employment agreements, and leases, the legal due diligence checklist covers all of it in one document. It's the list I'd work through with a solicitor before signing anything.

The IP section is often treated as an afterthought — buried after the financial statements and lease review — because it feels less urgent. The money's in the P&L, the risk is in the lease. That's mostly true. But I've seen IP disputes delay settlements by months and cost more to fix than the original legal costs would have been to get right.

Run the IP checks in parallel with everything else, not after.

Frequently asked questions

Does a registered business name give you IP protection in Australia?

No. A registered business name under ASIC just means no one else can register the same name in the same state. It doesn't give you the right to stop others from using a similar name commercially — that requires a registered trademark with IP Australia.

Who owns the IP created by a contractor working for my business?

Under Australian copyright law, the contractor owns it — unless there's a written agreement stating otherwise. If the business website, logo, or custom software was built by a contractor and there's no IP assignment agreement, the contractor may still own the copyright. This is extremely common and easily missed.

What happens to software subscriptions when I buy a business?

Most SaaS subscriptions (Xero, ServiceM8, MYOB, etc.) are personal accounts that don't transfer. You'll need to create new accounts and migrate data. Budget for this in the transition period and check whether data export is included in the plan tier.

Can the seller keep using the business name after settlement?

Only if you let them — and you shouldn't. Your SPA should include a specific clause preventing the seller from trading under the same or similar name after settlement. This overlaps with the restraint-of-trade clause but needs to address the name specifically.

Do I need to re-register trademarks after an asset sale?

Yes. In an asset sale, any registered trademarks must be assigned to you and the assignment must be recorded with IP Australia. Your solicitor will lodge the change of ownership as part of the settlement process.

This is covered in depth in Module 5 of the Playbook. The short version: IP due diligence isn't complicated, but it does require asking specific questions early. Don't wait until your solicitor's review to discover that half the assets you're buying aren't owned by the entity you're buying.

For more on the broader due diligence process, the due diligence checklist for buying a business in Australia is a good starting point. And if you want to go deeper on the parts most buyers miss, subscribe to The Leveraged Worker newsletter — it's where I write about the deals I'm working on, the mistakes I see others make, and what actually matters when you're buying a blue-collar business in Australia.