The first IP question investors often ask is "whose name is the trademark in"; in listing review, trademark issues can constitute a substantive obstacle. This article lays out the trademark-related review points in financing due diligence and IPO review: what is checked, when follow-up questions are triggered, and how far in advance to prepare.
1. Why Trademarks Draw the Closest Scrutiny in Due Diligence
Trademarks directly correspond to brand assets and revenue sources. Problems usually concentrate in three categories:
- Ownership: the trademark is not in the name of the issuer or target entity, but in the name of the founder personally, an affiliate, or an overseas entity;
- Stability: pending proceedings such as invalidation, non-use cancellation (撤三), opposition, or infringement litigation;
- Match: registered classes do not match the actual main business, or key sales markets lack registrations.
2. Express Requirements in the Issuance Conditions
Article 12 of the Administrative Measures for the Registration of Initial Public Offerings of Stocks lists "no material ownership disputes involving major assets, core technologies, trademarks, etc." as one of the issuance conditions. In other words, a trademark dispute is no ordinary matter: once it is "material," it may directly affect whether the issuance conditions are met.
Supporting this: sponsors and lawyers must review IP status per the due diligence standards; the prospectus must disclose, per the content and format standards for information disclosure, the means of acquisition, quantity, legal status, and disputes of IP such as trademarks; and under the review Q&A standards, where a core trademark is licensed to the issuer by a controlling shareholder or actual controller, due diligence must fully examine and substantiate the reasonableness and stability of the authorization and its impact on the issuer's continuing operations.
3. Six Checklists for Due Diligence Review
- Rights inventory: all trademarks at home and abroad (registered, pending, and lapsed), listed by entity, class, and legal status, and mapped one-to-one to business lines;
- Ownership source: original acquisition or assignment, whether assignments were completed and recorded, whether there are co-owned trademarks, and whether there are pledges or freezes;
- Authorization relationships: whether core trademarks are licensed by controlling shareholders, actual controllers, or related parties; the license type, term, termination conditions, and whether the license has been filed with the trademark office;
- Stability: pending proceedings such as opposition, invalidation, non-use cancellation, administrative litigation, or infringement litigation;
- Overseas layout: whether registrations in major sales markets are complete, and whether overseas trademarks have been squatted by distributors or contract manufacturers;
- Match with the main business: whether registered classes cover the actual goods and services, and whether the identifiers used in promotion, packaging, and platform stores match the registered designs.
4. The Four Situations Most Often Followed Up
- Trademark in the founder's personal name: it must be assigned to the issuer and the transfer completed, or the reasons it cannot be transferred and alternative arrangements explained;
- Licensed by a controlling shareholder: the stability of the license must be substantiated — whether it can be withdrawn at any time and how the issuer would continue operating after termination — usually requiring a long-term, irrevocable, renewable license arrangement;
- Missing overseas trademarks or squatting: remediation plans must be explained (opposition, invalidation, non-use cancellation, assignment) and the impact on overseas revenue assessed;
- Pending invalidation or infringement litigation: the impact of outcomes on core products must be assessed, with stress testing under losing scenarios where necessary.
5. What to Start Doing at the Financing Round
- Consolidate early: gather trademarks from individuals and affiliates into the operating company — transfers take time; do not wait until filing;
- Regularize licenses: where licenses are used, sign formal written license agreements and file the licenses (an unfiled license cannot be asserted against bona fide third parties — see the article "Brand Licensing and Merchandising");
- Backfill overseas registrations in sync: key markets should at least have applications accepted, avoiding "revenue without rights";
- Clean up zombie trademarks and out-of-scope use: actively dispose of long-unused classes to avoid third-party cancellations during the review period;
- Maintain a ledger updated quarterly: registration certificates, assignment proofs, license contracts, and litigation documents archived centrally;
- Prepare a trademark-business mapping: explain clearly the relationship between each brand and product lines and revenue composition.
6. Three Reminders for Founders
- A trademark is not "the brand department's business" — it is finance and legal business: it appears on all three statements of assets, revenue, and risk;
- Do not treat "licensed use" as resolved: the license relationship itself is a review focus; insufficient stability is itself the problem;
- Time is the only remedy: squatting, invalidation, and transfers take months to years; the later due diligence finds a problem, the greater the cost.
The specific standards of issuance review and due diligence adjust with regulatory rules and review practice. In actual preparation, defer to the current Administrative Measures for the Registration of Initial Public Offerings of Stocks, the due diligence standards for sponsors and lawyers, the information disclosure standards, and the regulators' latest Q&A. The rules in this article are current as of 2026.
7. Where to Get It Done
If you need agency for the above procedures, book a licensed trademark agent's registrability assessment service with MyTMBee, with full assistance from material preparation through submission and follow-up.