IP Due Diligence in Turkish Mergers and Acquisitions

When you buy a Turkish technology company or a well-known brand, do you actually know what you are buying? A company's real value often lies not in its physical assets but in its trademarks, patents, designs, software code and domain names. IP due diligence is the legal review that establishes — before closing — whether the target genuinely owns the rights it claims, and whether those rights are valid and transferable. For foreign investors in particular, this stage directly shapes both the deal price and whether the transaction can proceed at all.

Why Due Diligence Is Critical

In an acquisition, the buyer must independently verify the entire IP portfolio, whether or not it appears on the target's balance sheet: registered and unregistered trademarks, patents and utility models, industrial designs, works protected under the FSEK (software above all), domain names and the trade name. The goal is to answer three questions: Do these rights actually exist, is the target the rightful owner, and are they encumbered by third-party claims?

The legal structure of the deal shapes the scope of review. In a share deal, the legal entity recorded as the owner of a trademark or patent does not change — the target company keeps its rights. In an asset deal, IP rights are transferred one by one, and each right requires a separate assignment. This distinction drives both the contract structure and the post-closing recordal steps.

Common Red Flags

IP reviews reveal recurring risk patterns:

• Unregistered marks used for years: If the business actually uses a mark but never registered it with TÜRKPATENT, the scope of the right and its enforceability against third parties are weak.
• Undocumented employee inventions: Articles 113 and following of the Industrial Property Law No. 6769 (SMK) govern service inventions. If the employer's claim to the invention and the compensation owed to the employee were not handled properly, true ownership of the patent can become contested. Article 117 makes these provisions mandatory — nothing can be arranged to the employee's detriment.
• Lapsed renewals: Trademark and design protection runs for fixed terms; if the renewal fee went unpaid, the right may have expired.
• Ambiguous licence agreements: Licences that fail to spell out assignment and sub-licensing rights put post-acquisition use at risk.
• Open-source compliance gaps: If the target's product incorporates open-source components, failure to meet licence obligations (such as source-code disclosure) can create significant liability.

Verifying Rights Through the TÜRKPATENT Registry

Most registered rights can be confirmed through public records. Under SMK Article 106, patent applications and patents are entered in the register, and the register is public; the same principle applies to trademarks and designs. Through TÜRKPATENT's online search module you can check the owner, the application and registration dates, the scope of protection, renewal status, and any recorded licence, pledge or attachment annotations. This verification is the most direct way to test the target's representations against independent records.

IP Representations and Warranties in the SPA

In a Share Purchase Agreement (SPA) governed by Turkish law, IP-specific representations and warranties are the contractual backstop to the diligence process. The seller typically warrants that the target is the exclusive owner of all listed rights, that the rights are valid and in force, that they do not infringe third-party rights, that assignments relating to employee inventions and authorship have been properly completed, and that no infringement litigation is pending. FSEK Article 18 provides that the economic rights in works employees create in the course of their duties are exercised by the employer unless otherwise agreed — but for critical assets such as software, that transfer is expected to be confirmed contractually. If the warranties prove untrue, the buyer can turn to indemnity and price-adjustment mechanisms.

Post-Closing IP Integration

Once the deal completes, the rights must pass to the correct owner not only on paper but in the register. SMK Article 148 provides that industrial property rights may be assigned; that the validity of an assignment agreement depends on notarial certification (Article 148/4); and that legal transactions are recorded in the register. The critical point: under Article 148/5, rights arising from transactions that are not recorded cannot be asserted against good-faith third parties. In an asset deal, therefore, the assignment of each trademark, patent and design must be recorded with TÜRKPATENT. In a share deal the registered owner does not change, but any change to the company's trade name or address should still be recorded. On the copyright side, FSEK Article 48 permits the transfer of economic rights, while Article 52 requires such assignment agreements to be in writing and to specify each transferred right separately.

Frequently Asked Questions

In a share deal, do the IP rights need to be re-registered? As a rule, no. In a share deal the legal entity recorded as the owner does not change, so the rights need not be reassigned. If the company's trade name or address has changed, however, recording those changes is advisable. In an asset deal, a separate assignment recordal is required for each right.

Does an unregistered trademark have any value in an acquisition? It may have limited value. Actual use and reputation can generate certain rights, but they do not provide protection as strong or as transferable as a registered mark. For such marks, a registration process should be planned before or after the deal.

Who owns software developed by an employee? Under FSEK Article 18, unless otherwise agreed, the employer exercises the economic rights in works employees create in the course of their duties. Even so, for critical software this position should be secured through clear contracts and assignment documents.

As a foreign investor, can I run the registry search myself? Because the TÜRKPATENT register is public, basic searches are open to everyone. Interpreting the scope of protection, the annotations and the chain of title, however, requires expertise, and an independent legal review is recommended.

How Mona Hukuk Can Help

IP due diligence is one of the most technical and most easily overlooked stages of an acquisition. Mona Hukuk provides end-to-end support to domestic and foreign investors buying a Turkish company or its assets — from TÜRKPATENT registry review, employee-invention and software chain-of-title analysis, and negotiation of the SPA's IP representations and warranties, to post-closing assignment recordals.

Contact us at contact@monahukuk.com or call +90 (242) 606 14 32 for a consultation in Antalya.