Copyright Due Diligence in M&A Transactions

Mergers and acquisitions are among the most consequential transactions in commercial life. They involve the transfer of business value assets, revenue streams, operational capabilities, market positions from one set of owners to another, and they carry with them all the risks and liabilities that attach to the business being acquired. In an economy increasingly defined by the creation, distribution, and exploitation of intellectual property, the copyright position of a target business has become one of the most commercially significant dimensions of transaction due diligence. A target company whose copyright portfolio is defective whose chain of title is broken, whose licences are inadequately documented, whose software incorporates open source code that compromises its proprietary claims, or whose content business rests on agreements that do not survive a change of control may be worth substantially less than its headline valuation suggests.

Copyright due diligence in mergers and acquisitions is the systematic investigation of the target company’s copyright position, designed to identify, assess, and where possible mitigate the copyright-related risks that the acquirer will assume upon completion of the transaction. It is a discipline that requires the integration of legal analysis of the Copyright Act, 1957, contract law, and the relevant transaction documents with commercial judgment about the materiality of identified risks, technical understanding of how copyright arises and is transferred, and practical knowledge of the copyright landscapes specific to the industry sectors in which the target operates.

India’s growing role as a significant participant in global mergers and acquisitions both as a target jurisdiction for inbound investment and as a source of outbound acquisitions by Indian companies makes the understanding of copyright due diligence in the Indian legal context increasingly important for transaction lawyers, investment professionals, and business executives engaged in M&A activity. The Copyright Act, 1957 as amended, the Indian Contract Act, 1872, and the general principles of Indian corporate law collectively create the framework within which copyright due diligence must be conducted for Indian target companies.

This article offers a comprehensive examination of copyright due diligence in mergers and acquisitions the scope and objectives of copyright due diligence, the specific areas of investigation for different categories of copyright-intensive businesses, the formal requirements for valid copyright assignments under Indian law, the treatment of open source software in technology company transactions, the management of content agreements in media and entertainment transactions, the change of control provisions that affect copyright licensing arrangements, the structuring of representations and warranties, indemnities and purchase price adjustments based on identified copyright risks, and the practical conduct of copyright due diligence in Indian transactions.

The Objectives and Scope of Copyright Due Diligence

The fundamental objective of copyright due diligence in an M&A transaction is to enable the acquirer to make an informed assessment of the copyright-related value and risk in the target business. This objective encompasses several specific goals that together define the scope of the due diligence exercise.
To establish what copyright the target owns to identify all categories of copyright-protected works created or acquired by the target, to verify that the target’s claimed ownership of those works is legally valid, and to assess any gaps or defects in the chain of title through which the copyright was acquired. Copyright ownership is the foundation of copyright value a company that does not legally own the copyright it believes it owns cannot license it, cannot enforce it, and cannot transfer it to an acquirer.
To understand what copyright the target uses to identify the copyrighted works of third parties that the target uses in its business, to verify that the target has adequate licences or other authorisation for those uses, and to assess the risk that any licence may be terminated, may not survive a change of control, or may impose restrictions on the acquirer’s intended use of the target’s business post-acquisition.
To identify third-party copyright claims against the target to understand any allegations or proceedings relating to copyright infringement by the target, any claims that the target has received from third parties asserting that the target’s products or services infringe their copyright, and any circumstances that might give rise to such claims even where formal allegations have not yet been made.
To assess the adequacy of the target’s copyright management practices whether the target maintains adequate records of copyright ownership and licensing, whether it has appropriate employment and contractor agreements in place to ensure that copyright in works created for its benefit vests in the company, and whether it has appropriate policies and practices for managing the copyright risks inherent in its business.

The scope of copyright due diligence varies significantly depending on the nature of the target business. A technology company whose core product is a proprietary software platform requires intensive scrutiny of software copyright ownership, open source compliance, and employee and contractor agreements. A media or entertainment company requires comprehensive analysis of content agreements, rights chains, and licensing arrangements. A publishing company requires examination of author agreements, rights reversions, and digital rights management. A consumer goods company requires attention to product design copyrights and brand creative assets. The due diligence scope must be calibrated to the specific copyright risks most significant to the target’s business model.

The Legal Foundation – Copyright under Indian Law in the Transaction Context

Before examining the specific areas of copyright due diligence investigation, it is necessary to understand the legal principles that govern copyright ownership and transfer under Indian law principles that define what the due diligence investigation must establish in order to confirm the validity of the target’s copyright position.

Copyright in India arises automatically upon the creation of an original work, without any registration or formality requirement. This automatic subsistence means that copyright due diligence cannot rely solely on registered copyrights the due diligence must examine the factual circumstances of creation for each category of work to determine whether copyright has arisen and in whom it initially vested.

Section 17 of the Copyright Act, 1957 determines the first ownership of copyright. The general rule is that the author is the first owner. The provisos to Section 17 modify this rule in two commercially important contexts: proviso (b) provides that where a work is created by an employee in the course of their employment under a contract of service, the employer is the first owner; and proviso (c) provides that where a work is created by an author in pursuance of a commission by another party, the commissioning party is the first owner in the absence of any agreement to the contrary.

Section 19 of the Copyright Act governs the assignment of copyright. It provides that no assignment is valid unless it is in writing and signed by the assignor or their authorised agent. The assignment must specify the rights assigned, the duration and territorial extent of the assignment, the amount of royalty if any, and any revision or termination clause. Section 19(5) provides that where the period of assignment is not specified, it shall be deemed to be five years. Section 19(7) provides that where the territorial extent is not specified, it shall be presumed to extend within India only.

These provisions create the legal framework within which copyright due diligence must operate. The due diligence must establish, for each category of copyright claimed by the target:

First, whether the copyright has arisen in a qualifying work that satisfies the originality requirement. Second, who the first owner of the copyright was whether the proviso (b) or (c) rules apply to vest copyright in the target as employer or commissioning party, or whether it vested in an individual author who must have subsequently assigned it to the target. Third, whether any assignment from an individual author to the target satisfies the formal requirements of Section 19 particularly whether it is in writing and signed. Fourth, whether the assignment clearly covers the rights now claimed by the target including any rights in media or territories that may have arisen after the assignment was made.

Employee and Contractor Agreements – The Foundation of Software Copyright Due Diligence

For technology companies whose primary asset is typically a proprietary software platform, application, or codebase the copyright due diligence begins with an examination of the employment and contractor agreements under which the software was developed. This examination is the foundation of the entire software copyright analysis because it determines whether copyright in the code vests in the target company or in the individual developers who wrote it.

Under Section 17 proviso (b), copyright in works created by employees in the course of their employment under a contract of service vests in the employer as first owner. For employees of a technology company who develop code as part of their employment duties, this provision gives the company first ownership of the copyright in the developed code without the need for any assignment. The due diligence must verify that the developers in question were employees under contracts of service not independent contractors and that the development work was performed in the course of their employment duties rather than as a personal project unrelated to their employment.

Where developers are engaged as independent contractors rather than employees a very common arrangement in the Indian technology sector, where companies frequently engage freelance developers, outsourced development teams, and project-specific contractors the Section 17 proviso (b) employment exception does not apply. The proviso (c) commissioning exception may apply, but its scope is not coextensive with proviso (b) it applies only in limited circumstances, and the identification of those circumstances is a matter of legal analysis rather than automatic rule application.

In practice, the most reliable way to ensure that copyright in contractor-developed code vests in the company is through an express written assignment of copyright in the contractor agreement. The copyright due diligence must therefore examine all contractor agreements particularly agreements with significant contributors to the target’s codebase to confirm that they contain effective copyright assignment provisions. Where contractor agreements lack copyright assignment provisions, or where code was developed by contractors without any written agreement, the copyright in that code may remain with the contractor rather than with the target a significant gap in the target’s intellectual property portfolio.

The due diligence must also examine whether assignment provisions in contractor agreements satisfy the formal requirements of Section 19. An assignment clause in a contractor agreement is a written, signed instrument within the meaning of Section 19 only if it specifically addresses the copyright assignment and identifies the rights being assigned with the specificity that Section 19(2) requires. A generic “work for hire” clause, or a clause that purports to assign “all intellectual property rights” without specifically addressing copyright, may not constitute a valid copyright assignment under Section 19 depending on its specific language and the circumstances of the engagement.

The Open Source Software Question

The open source software compliance analysis is among the most technically demanding and commercially significant components of copyright due diligence in technology company transactions. Virtually all commercially significant software incorporates open source components code licensed under open source licences including the GNU General Public License, the MIT License, the Apache License, the BSD License, and numerous others and the copyright implications of this incorporation must be carefully assessed.

Open source licences impose conditions on the use of open source code that may affect the target’s proprietary claims and the acquirer’s ability to use the acquired software in its intended manner. The most significant distinction in open source licence terms is between “copyleft” licences and “permissive” licences.

Copyleft licences primarily the GNU General Public License family (GPL v2, GPL v3, LGPL, AGPL) require that any software that incorporates, modifies, or is distributed in combination with GPL-licensed code be itself distributed under the GPL licence. This requirement, if it applies to the target’s software, may mean that the target’s proprietary code the code it regards as its confidential trade secret must be disclosed and made available to users of the software under the GPL licence’s terms. The disclosure of proprietary source code under GPL terms would fundamentally undermine the commercial value of a proprietary software product, and the identification of GPL-licensed code in a target’s codebase is a high-priority finding in copyright due diligence.

Permissive licences MIT, Apache, BSD impose fewer conditions and generally permit the incorporation of open source code into proprietary products without requiring the disclosure of the proprietary code, subject to attribution and notice requirements. Compliance with permissive licence conditions typically requires the inclusion of copyright notices and licence texts in the distributed software but does not compromise the proprietary character of the surrounding code.

The copyright due diligence must conduct a systematic open source audit of the target’s codebase identifying all open source components incorporated in the target’s software, the licence under which each component is used, and whether the target’s use of each component is consistent with its licence terms. This audit requires both legal analysis of the licence terms and technical analysis of the codebase, typically conducted through a combination of manual code review and automated software composition analysis tools that identify open source components by their code signatures.

Common findings in open source audits include the use of GPL-licensed components in proprietary software without satisfying GPL disclosure obligations, the failure to include required copyright notices and attribution in distributed software, the use of open source components whose licences are incompatible with the target’s overall licensing model, and the incorporation of open source components that have been modified in ways that may trigger additional licence obligations.

Where significant open source compliance deficiencies are identified, the acquirer must assess the materiality of those deficiencies and the cost and feasibility of remediation. Some open source compliance issues can be remediated by replacing the offending open source component with an equivalent proprietary or permissively licensed alternative. Others particularly where GPL-licensed code is deeply integrated into the target’s codebase may require more extensive and costly remediation or may represent a fundamental risk to the target’s intellectual property position.

Content Rights Due Diligence in Media and Entertainment Transactions

Media and entertainment company acquisitions present copyright due diligence challenges of a different character from technology company transactions. The primary copyright asset in a media company is its content library the films, television programmes, music recordings, books, digital content, and other creative works in which the company holds copyright or exploitation rights. The due diligence must verify the company’s rights in each significant content asset and identify any encumbrances, restrictions, or deficiencies that affect the exploitability of those rights.

The rights chain analysis is the cornerstone of content rights due diligence. For each significant content asset, the due diligence must trace the chain of ownership from the original creators of the work to the current rights holder, verifying at each stage that copyright was properly transferred by a valid written assignment satisfying Section 19’s requirements. A break in the chain an assignment that was oral rather than written, an assignment by a person who did not hold the relevant rights, or an assignment of rights that the assignor had already assigned to another party creates a defect in the rights chain that may mean the target does not hold the rights it believes it holds.

For film libraries, the rights chain analysis must address the ownership of the film copyright under Section 14(d), the underlying works whose copyright is preserved by Section 13(4) the screenplay, the music, the lyrics, and other constituent works and the performers’ rights of the actors and musicians who appear in the film. The 2012 amendment’s royalty-sharing provisions mean that composers and lyricists whose works appear in films may have residual rights to equal royalty shares from exploitation of those works outside the film context, which must be factored into the valuation and the representations and warranties given in the transaction.

The territorial scope of content rights is particularly important for media company transactions. Content rights are frequently licensed on a territory-by-territory basis, with the original rights holder retaining rights in some territories while licensing others to distribution partners. The due diligence must map the territorial coverage of the target’s rights in each significant content asset, identifying territories where the target holds rights and territories where rights are held by third-party licensees, and assessing the terms on which those licences will affect the acquirer’s post-acquisition exploitation strategy.

The temporal scope of content rights the period for which rights are held is equally important. Content licences have defined terms, and rights revert to the licensor at the end of the licence term. An acquirer who pays a significant premium for a media company’s content library must understand that some of the content rights in that library will expire during the period of anticipated commercial exploitation, reducing the library’s value. The due diligence must identify the expiry dates of significant content licences and assess the impact of those expiries on the target’s projected revenue streams.

Change of Control Provisions in Copyright Licences

One of the most practically significant copyright due diligence issues in M&A transactions is the effect of the transaction on the target’s existing copyright licences. Many commercially important copyright licences particularly licences of software, content, and other high-value copyright assets contain change of control provisions that affect the licence’s survival upon the acquisition of the licensee.

A change of control provision in a copyright licence typically provides that the licence may be terminated by the licensor, or that the licence requires the licensor’s consent to continue, if the licensee undergoes a change of control typically defined as a change in the ownership of more than fifty percent of the voting shares of the licensee, a merger of the licensee with a third party, or the acquisition of the licensee’s business or assets by a third party.

The commercial rationale for change of control provisions in copyright licences is that the licensor consented to licence its intellectual property to a specific counterparty chosen for its reputation, its technical capabilities, its compliance record, or its relationship with the licensor and did not intend to extend that consent to any successor entity that might acquire the licensee. A licensor who grants an exclusive content licence to a carefully chosen distribution partner does not intend that licence to transfer automatically to a competitor who acquires the distribution partner in a hostile takeover.

The copyright due diligence must identify all copyright licences that contain change of control provisions and assess the impact of those provisions on the proposed transaction. For each licence identified, the due diligence must determine whether the proposed transaction constitutes a “change of control” within the licence’s definition, what the consequences of a change of control are under the licence termination, consent requirement, renegotiation right and what the commercial impact of those consequences would be on the target’s post-acquisition business.

Where significant licences contain change of control provisions that would be triggered by the proposed transaction, the acquirer must either obtain the licensor’s consent to the transaction before completion, negotiate the waiver of the change of control provision, or factor the risk of licence termination or renegotiation into the transaction pricing. The identification of critical licences with problematic change of control provisions is among the highest-priority findings in copyright due diligence and should be escalated to the deal team immediately upon identification.

Under Indian law, a licence of copyright is not automatically assigned to an acquirer by a business transfer unless there is specific contractual provision or the transaction is structured as a share acquisition that preserves the target company’s identity as the licensee. In an asset acquisition where the target’s business is acquired as a going concern rather than through the acquisition of its shares copyright licences do not automatically transfer to the acquirer and must be specifically assigned by agreement with the licensor. The due diligence must identify all copyright licences that would need to be specifically assigned or consented to in an asset acquisition structure.

Publishing and Author Agreement Due Diligence

For publishing company acquisitions, the copyright due diligence centres on the examination of author agreements the publishing contracts under which the company has acquired rights in its published titles. The primary concern is to verify that the publishing agreements constitute valid assignments or exclusive licences of the relevant rights, that those rights have not lapsed under reversion provisions triggered by the failure to exploit the works, and that the rights extend to the formats and territories in which the acquirer intends to exploit the content.

The reversion of rights provisions in publishing agreements provisions under which rights revert to the author if the work goes out of print or if the publisher fails to exploit the rights within a defined period are particularly important in publishing due diligence. As discussed in the article on publishing agreements and copyright, the digital transformation of publishing has created significant uncertainty about the meaning of “out of print” triggers, with publishers arguing that digital availability prevents reversion and authors arguing that mere technical digital availability does not constitute active exploitation. The due diligence must identify all titles in the target’s catalogue where reversion provisions may have been triggered or may be triggered in the near future, and assess the legal and commercial risk of those reversions.

The 2012 amendment’s provisions protecting authors’ royalty rights particularly the non-waivable right to an equal share of royalties from exploitation in forms other than as part of a cinematograph film are directly relevant to publishing due diligence where the target holds rights in works that have been or may be adapted into films. The acquirer must understand the extent to which the target’s content library is subject to residual royalty obligations to authors that will reduce the net revenue from exploitation.

The digital rights coverage of publishing agreements whether agreements entered into before the widespread adoption of ebooks and digital distribution expressly cover digital rights, and if so on what terms is a standard area of investigation in publishing due diligence. As discussed in the publishing agreements article, agreements that predate the digital era may or may not clearly cover digital distribution rights, and the resolution of this ambiguity has significant implications for the commercial value of the catalogue.

Software Licensing Due Diligence – Third-Party Software Used by the Target

In addition to examining the copyright in software developed by the target, copyright due diligence for technology companies must examine the software licences under which the target uses third-party software in its business. Most businesses use significant quantities of third-party software operating systems, productivity applications, development tools, database software, cloud services, and specialist business applications and the adequacy of their licences for that software is a standard area of due diligence investigation.

The examination of third-party software licences must verify that the target holds valid licences for all significant third-party software it uses, that those licences cover the target’s actual usage the number of users, the deployment environment, the geographic scope and that the licences will survive the proposed transaction. Enterprise software licences typically contain change of control provisions similar to those in content licences, and the due diligence must identify all significant software licences that may be affected by the transaction.

The identification of unlicensed or inadequately licensed software is a significant due diligence finding because it exposes the acquirer to liability under Section 63B of the Copyright Act the provision that makes knowing use of infringing copies of computer programs a criminal offence. The acquirer who inherits a target with widespread unlicensed software usage inherits both the civil infringement liability and the criminal exposure associated with that usage.

Copyright Litigation and Claims Due Diligence

Copyright due diligence must comprehensively examine any pending, threatened, or resolved litigation or claims involving copyright in relation to the target’s business. The investigation must cover claims both by the target against third parties for infringement of its copyright, and by third parties against the target for alleged infringement of their copyright.

Claims against the target for copyright infringement are of primary concern because they represent existing or contingent liabilities that the acquirer will assume upon completion. The due diligence must identify all pending proceedings, all formal claims or letters of demand received by the target, and any circumstances known to the target that might give rise to copyright infringement claims even where no formal claim has yet been made. Each identified claim must be assessed for its legal merit, the potential quantum of damages or settlement cost, and the likelihood of an adverse outcome.

The assessment of potential infringement claims that have not yet been formally made the “pre-claims” analysis requires an examination of the target’s products and services for potential copyright risks. A technology company whose product incorporates third-party code without adequate authorisation, a media company whose content library includes works whose rights chain is uncertain, and a publishing company whose editorial content is alleged to have been produced without original authorship all face the risk of copyright claims that may not yet have been formally made but which the due diligence must identify and assess.

Copyright claims by the target against third parties are assets of the target the target may have unresolved claims for infringement of its copyright that represent value to the acquirer. The due diligence must identify any such claims, assess their legal merit and potential value, and consider whether the transaction structure preserves the target’s ability to pursue those claims post-acquisition.

Representations, Warranties, and Indemnities

The findings of copyright due diligence directly inform the representations and warranties sought by the acquirer in the transaction documents. The representations and warranties allocate the risk of identified and unidentified copyright issues between the parties the seller warrants the accuracy of their representations, and if those representations prove inaccurate, the acquirer has a warranty claim against the seller for the resulting loss.

Standard copyright representations and warranties in Indian M&A transactions cover the following areas. First, ownership the seller represents that the target is the sole and exclusive owner of all copyright in its key works and that the chain of title is complete and unencumbered. Second, validity of assignments the seller represents that all copyright assignments to the target satisfy the formal requirements of Section 19. Third, licences the seller represents that all licences held by the target are valid, subsisting, and will not be terminated or adversely affected by the transaction. Fourth, no infringement the seller represents that neither the target’s products nor the target’s business operations infringe any third party’s copyright. Fifth, open source compliance the seller represents that all open source software incorporated in the target’s products is used in compliance with its licence terms. Sixth, no pending claims the seller represents that there are no pending, threatened, or anticipated copyright claims against the target.

Where the copyright due diligence identifies specific risks open source compliance gaps, uncertain rights chains, change of control provisions in key licences the acquirer will seek specific indemnities against losses arising from those identified risks. A specific indemnity provides dollar-for-dollar compensation for losses arising from the specified risk, without the acquirer needing to establish that a general warranty has been breached. The negotiation of specific indemnities for identified copyright risks is one of the most commercially significant outputs of the due diligence exercise.

Purchase price adjustments based on identified copyright deficiencies are another mechanism for reflecting due diligence findings in the transaction economics. Where the due diligence identifies copyright deficiencies that materially affect the value of the target’s intellectual property portfolio significant open source contamination of a proprietary software product, major content licence terms that expire before the anticipated period of commercial exploitation, or key agreements that will not survive the change of control the acquirer may seek a reduction in the purchase price to reflect the diminution in value caused by those deficiencies.

Due Diligence Procedures – Practical Conduct

The practical conduct of copyright due diligence in an Indian M&A transaction involves the following procedural steps.

The due diligence begins with the compilation of a comprehensive copyright due diligence request list a document that specifies all the information and documents the acquirer requires to assess the target’s copyright position. The request list is tailored to the specific copyright risks most significant to the target’s industry and business model, and it is submitted to the target’s representatives at the commencement of the due diligence process.

The target’s responses to the due diligence request list, together with the documents provided in the virtual data room, form the primary basis for the due diligence analysis. The due diligence team typically comprising IP lawyers, commercial lawyers, and in technology transactions, technical advisors with software engineering expertise reviews the provided documents, identifies gaps and inconsistencies, and formulates follow-up questions for clarification.

The technical analysis of software copyright issues particularly the open source audit requires the engagement of specialised technical advisors who can analyse the target’s codebase using software composition analysis tools and manually review code for open source components and compliance issues. This technical analysis is conducted in parallel with the legal analysis of employment and contractor agreements and should be coordinated to ensure that the legal and technical findings are integrated into a coherent assessment.

Management interviews meetings between the acquirer’s due diligence team and the target’s management and technical staff are an important source of information about the target’s copyright position that may not be fully captured in the documents provided in the data room. Management interviews should specifically address the history of the target’s software development, the engagement of contractors, the treatment of open source software, any known or suspected copyright risks, and any previous or ongoing disputes involving copyright.

The due diligence findings are documented in a copyright due diligence report a comprehensive analysis of all identified copyright risks, their legal significance, their commercial materiality, and the due diligence team’s recommendations for how they should be addressed in the transaction documents or remediated before completion.

Specific Considerations for Indian Targets

Several specific considerations arise in copyright due diligence for Indian target companies that reflect the particular characteristics of the Indian copyright legal framework and the Indian business environment.

The engagement of offshore development teams a common feature of the Indian technology sector, where companies frequently engage development teams in other jurisdictions including Eastern Europe, Southeast Asia, and other parts of India creates copyright ownership questions that the due diligence must address. Where offshore developers are engaged as independent contractors, the copyright in their work vests in them under the law of the jurisdiction in which they are located, and the assignment of that copyright to the target must comply with both Indian law and the law of the contractor’s jurisdiction.

The treatment of works created before the target company was incorporated works created by the founders of the business in a personal capacity before the company was established is a specific area of risk in early-stage technology company transactions. Where the founders created software, content, or other copyright-protected works before the company was incorporated and subsequently transferred those works to the company, the due diligence must verify that the transfer was effected by a valid written assignment satisfying Section 19’s requirements. Informal transfers oral agreements, informal practice, or the mere assumption that works “belong to the company” are not valid assignments under Indian copyright law.

The statutory moral rights of authors under Section 57 which persist after copyright assignment and cannot be extinguished by contract are relevant to content company acquisitions where the acquirer intends to modify, adapt, or use the acquired content in ways that might engage the original authors’ integrity rights. The acquirer must assess the extent to which the target’s intended post-acquisition exploitation of content assets might be constrained by the moral rights of the works’ original authors.

Conclusion

Copyright due diligence in mergers and acquisitions is a discipline whose commercial importance has grown in direct proportion to the increasing significance of intellectual property as a driver of business value. For technology companies, media companies, publishing businesses, and any enterprise whose commercial value rests substantially on its copyright portfolio, the rigour and comprehensiveness of copyright due diligence is a direct determinant of transaction certainty and post-acquisition value delivery.

Under Indian law, the specific requirements of the Copyright Act the automatic subsistence of copyright, the first ownership rules and their provisos for employment and commissioning, the formal requirements for valid assignments under Section 19, the open source compliance framework, the content agreement considerations arising from the 2012 amendment’s royalty provisions, and the change of control implications of copyright licences create a distinctive legal landscape that must be navigated with care in any transaction involving an Indian target.

The output of comprehensive copyright due diligence the identification of copyright risks, the structuring of appropriate representations and warranties and indemnities, and the negotiation of purchase price adjustments for material deficiencies enables acquirers to transact with appropriate knowledge of the copyright position they are acquiring and to protect themselves against the copyright risks they cannot eliminate before completion. For sellers, proactive copyright housekeeping ensuring that employment and contractor agreements contain adequate copyright provisions, conducting pre-transaction open source audits, confirming the validity of copyright assignments and licences, and resolving known copyright issues before the transaction process begins materially reduces the risk that copyright due diligence findings will create transaction risk, depress valuation, or require the negotiation of significant protections against identified risks.

In an era in which copyright is increasingly central to commercial value across virtually every industry sector, the quality of copyright due diligence is increasingly central to the quality of the M&A process itself.

References

The Copyright Act, 1957, Sections 13, 14, 17, 18, 19, 19A, 51, 55, 57, 63, 63B https://copyright.gov.in/Documents/CopyrightRules1958.pdf
The Copyright (Amendment) Act, 2012 https://copyright.gov.in/Documents/Amendment_Act2012.pdf
The Indian Contract Act, 1872 https://legislative.gov.in/sites/default/files/A1872-09.pdf
The Companies Act, 2013 https://www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf
Eastern Book Company v. D.B. Modak, (2008) 1 SCC 1 https://indiankanoon.org/doc/1023365/
Mannu Bhandari v. Kala Vikas Pictures Pvt. Ltd., AIR 1987 Delhi 13 https://indiankanoon.org/doc/889479/
Tips Industries Ltd. v. Wynk Music Ltd. (2019), Bombay High Court https://bombayhighcourt.nic.in
Indian Performing Right Society v. Eastern India Motion Pictures Association, AIR 1977 SC 1443 https://indiankanoon.org/doc/553674/
Amarnath Sehgal v. Union of India, 117 (2005) DLT 717 (Delhi High Court) https://indiankanoon.org/doc/1402532/
Microfibres Inc. v. Girdhar & Co., (2009) 40 PTC 519 (Delhi High Court) https://indiankanoon.org/doc/1760924/
GNU General Public License https://www.gnu.org/licenses/gpl-3.0.en.html
Apache License 2.0 https://www.apache.org/licenses/LICENSE-2.0
MIT License https://opensource.org/licenses/MIT
TRIPS Agreement https://www.wto.org/english/docs_e/legal_e/27-trips.pdf
Berne Convention for the Protection of Literary and Artistic Works https://www.wipo.int/treaties/en/ip/berne/
Copyright Office of India https://copyright.gov.in
Competition Commission of India https://www.cci.gov.in

Copyright Due Diligence in Mergers and Acquisitions – A Comprehensive Guide for Indian Transactions

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