IP Due Diligence for AI Investments

CipherLaw advises venture capital firms, private equity investors, and strategic acquirers on intellectual property matters in artificial intelligence transactions. Our practice provides actionable IP intelligence that informs investment decisions, supports valuation analysis, and identifies issues for negotiation or remediation.

AI companies present distinct intellectual property considerations. Patent eligibility for machine learning inventions, training data licensing, and the protection of model architectures require analysis that combines legal expertise with technical understanding of how these systems work. Our practice draws on experience advising technology companies from formation through IPO, building investment-grade patent portfolios, and serving as in-house IP counsel at a major cybersecurity company.

We provide IP due diligence across the investment lifecycle, from seed-stage investments through growth equity and M&A transactions. Our engagements examine patent portfolio quality, training data provenance and licensing, IP ownership chains, and trade secret protection practices. We distinguish material risks from matters that can be addressed post-closing—and present findings in formats designed for investment professionals.

Seed IP Review

For pre-seed and seed investments where rapid assessment and cost efficiency are priorities.

We verify IP ownership for founders, early employees, and contractors. We assess patent filings for claim scope and identify any major vulnerabilities. We conduct preliminary review of training data sources and licensing. The deliverable is a concise executive memo identifying material issues and recommended next steps.

This engagement is appropriate when deal velocity is high, investment size is modest, and you need confidence that no fundamental IP problems exist before proceeding.

Typical timeline: 3-5 business days. Expedited review available.

Series A Assessment

For Series A investments requiring comprehensive IP analysis to support valuation and deal structuring.

We conduct a full inventory of IP assets including patents, applications, trade secrets, and proprietary data. We trace the assignment chain from original creators through the company, identifying gaps and recommending remediation. We evaluate patent claim strength, prior art exposure, and freedom-to-operate considerations. We review training data licensing and provenance documentation. We assess trade secret identification and protection practices.

Deliverables include a detailed report, executive summary, risk matrix with materiality ratings, remediation roadmap, and briefing for your investment team.

Typical timeline: 7-10 business days. Expedited review available.

Growth Stage & M&A Review

For Series B and later investments, growth equity transactions, and acquisition due diligence where IP findings inform valuation and deal terms.

We conduct comprehensive diligence across the full scope of the company's intellectual property position. This includes detailed patent portfolio analysis, complete ownership chain verification, training data and licensing review, and trade secret protection assessment. We extend the analysis to include full freedom-to-operate evaluation, litigation risk assessment, and regulatory compliance review addressing EU AI Act and USPTO requirements. We examine existing license agreements for change-of-control provisions and other material terms, conduct management interviews on IP strategy and protection practices, and provide portfolio positioning analysis relative to competitive landscape.

Deliverables include a comprehensive report suitable for investment committee presentation, deal memo summarizing key findings and recommendations, and follow-up support through closing.

Typical timeline: 2-3 weeks. Expedited review available.

Areas of Focus

Patent Portfolio Quality. We evaluate claim scope, enforceability, and strategic positioning—not simply patent counts. For AI companies, this includes assessment of Section 101 eligibility risk and compliance with evolving USPTO guidance on AI-assisted inventions. We analyze prior art exposure, geographic coverage, and continuation strategy.

Training Data Provenance. We review data acquisition practices, licensing documentation, terms of service compliance, and exposure to copyright claims. Where training data provenance is uncertain or undocumented, we assess the nature and magnitude of associated risk.

IP Ownership Chain. We trace intellectual property from original creation through assignment to the company—founder contributions, employee work product, contractor deliverables, and any IP developed prior to company formation. We identify gaps in the assignment chain and provide remediation recommendations with estimated cost and timeline.

Trade Secret Protection. For AI companies, trade secrets often protect the most valuable assets: model architectures, training methodologies, and proprietary techniques. We assess whether the company has adequately identified its trade secrets and implemented documentation sufficient to support legal protection.

Engagement Terms

We offer fixed-fee engagements with guaranteed timelines. Scope is matched to transaction stage and investment size. Hourly arrangements are available for engagements requiring flexibility in scope.