What are the risks of relying on AI for IP due diligence?

Why IP Due Diligence Carries High Stakes

Intellectual property due diligence — the process of investigating a company’s or individual’s patents, trademarks, copyrights, and related rights, along with potential conflicts or vulnerabilities — is a routine part of mergers, acquisitions, licensing deals, and investment decisions. Because the value of many transactions depends heavily on the strength and freedom-to-operate status of the underlying IP, an incomplete or flawed due diligence review can lead to significant financial exposure if a problem, such as an undisclosed infringement risk or a competing patent, surfaces only after a deal closes. AI tools have become a common part of the due diligence toolkit, but overreliance on them carries specific risks worth understanding.

Coverage and Completeness Gaps

AI-powered search tools are limited by the sources they’re built to index and the way they process and interpret documents. Prior art or competing rights that exist in less common formats, older or less digitized archival materials, certain foreign-language sources not well covered by a given tool’s translation capabilities, or niche industry publications can still be missed even by a sophisticated AI search. Due diligence conducted in reliance on a single AI tool’s coverage, without supplementing it with other search sources or human expertise attuned to a specific technology area, risks an incomplete picture of the actual IP landscape.

The False Confidence Problem

A more subtle risk is that AI tools often present their search results in a clean, ranked, seemingly thorough format — which can create an impression of completeness that isn’t necessarily warranted. A reviewer looking at a well-organized top-ten list of relevant patents may feel confident that the most important references have been found, even though the tool cannot actually guarantee it identified every relevant document in existence. This dynamic can lead to under-scrutinizing the adequacy of the search itself, particularly under the time pressure common in deal due diligence.

Financial and Liability Exposure

Because IP due diligence often directly informs deal valuation, representations and warranties, and closing decisions, an inadequate review that misses a significant IP risk can expose the parties involved — and potentially the attorneys who conducted or relied on the review — to financial harm and liability claims if the gap surfaces later. This mirrors the liability dynamics seen elsewhere in AI-assisted legal work: the professional responsibility for the adequacy of the diligence process generally rests with the attorneys and firms conducting it, regardless of how much AI assistance was used.

Mitigating These Risks

Given these risks, most experienced IP practices treat AI search tools as one input into a broader due diligence process that also includes attorney judgment, supplementary search sources tailored to the specific technology area, and, where warranted by the size of the transaction, additional specialized search resources. Documenting the scope and methodology of a due diligence search can also help demonstrate reasonable diligence was exercised.

Bottom Line

Relying too heavily on AI for IP due diligence risks missing prior art in less-indexed or foreign-language sources, developing false confidence from a tool’s polished but incomplete results, and exposure if a deal proceeds on an inadequate review — pairing AI tools with experienced attorney judgment remains the standard safeguard.