"Secured financing in intellectual property is a rapidly evolving area of the law as intellectual property becomes the core asset in many industries. Secured Lending in Intellectual Property, 2nd Edition serves as a guide to best practices in this financing segment by examining the commercial and legal context of intellectual property in commercial transactions as well as financing vehicles and procedures, and the associated commercial and legal risks. The scope of this new edition has been significantly expanded and revised to cover all types of intellectual property, including copyright, patents, trademarks, trade secrets and domain names...The scope of this second edition has been significantly expanded and revised to include the extensive number of decisions that have been released since 2006 as well as a more comprehensive review of the 2009 amendments to the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act that relate to intellectual property."-- Résumé de l'éditeur.

The lack of coordination and/or uniformity between the intellectual property and secured transactions mechanisms are clear impediments in the use of intellectual property as collateral. Even if the systems could begin to unify the approach and philosophical view of the status of intellectual property under the law, there remain numerous issues that will also need to be overcome before the lenders will view intellectual property as a viable asset for the securing of lending.

Until recently, commercial lending was a resource only for companies that had significant tangible assets and historic accounts receivable. Borrowers traditionally pledged tangible assets and accounts receivable to secure bank loans, and intellectual property was a mere afterthought in the lender's credit analysis. Increasingly, more businesses are finding that their most valuable asset is their intellectual property portfolio. However, in the United Kingdom, and elsewhere, there is a structural uncertainty in the law relating to the use of intellectual property as collateral for the purpose of raising debt based finance. This article considers the evolution of intellectual property as collateral. It examines the significance of the availability of collateral to the lending decision and also considers whether the reluctance of lenders to use intellectual property as collateral is based in unfamiliarity, legal limitations or in the potential difficulties which arise out of the nature of intellectual property.

The past three decades have seen a decline in traditional industries in the United Kingdom and there has been a relative decline in the value of physical assets to the UK economy. At the same time, the value of intangible assets seen in intellectual property rights have increased considerably. As such, IP rights represent important assets for companies and often comprise the foundation for market dominance and continued profitability. There is a structural uncertainty in the law relating to the use of IP as collateral for the purpose of raising debt finance and this may impact upon the survival of firms with high ratios of intangible to tangible assets. This article considers the proper goals for an effective credit and security regime in IP. It examines the significance of the availability of collateral to the lending decision and also considers whether the reluctance to maximise the use of IP as security reflects inherent difficulties which arise out of the nature of IP as economic assets. This has implications for the reform of English personal property security law and the development of bright line priority rules associated with Article 9 of the US Uniform Commercial Code which is often cited as a model for reform of English law.

Economic development increasingly depends to a large extent on innovation. Innovation is generally covered by intellectual property (IP) rights and usually requires extensive funding. This book focuses on IP and debt financing as a tool to meet this demand. This book clarifies the situation of the use of IP as collateral in practice through a survey conducted in Japan on IP and debt financing. Various obstacles in the proper use IP and debt financing are identified, and some projects to facilitate its use are illustrated. IP and debt on a global scale, either by attracting foreign lenders or by collateralizing foreign IP rights, needs appropriate private international laws. This book analyzes such regulations in which the United Nations Commission on International Trade Law (UNCITRAL) has worked, paying due attention to the law of finance and insolvency law, as well as IP laws. However, further analysis is needed to identify under what conditions such solutions would show optimal effects. This book offers comprehensive analysis from an economic point of view.

In this paper, the practice of using patents as collateral for debt has been studied. To this aim, the USPTO Patent Assignment database has been used and all the patents that reported the “security interest agreement” type of conveyance, registered in the 2007-2010 years, have been extracted. The final dataset is made up of a total of 8,818 security interest agreement records, in which 133,110 patents are pledged as collateral for debt. Nearly 70% of the patents are associated with a subsequent release of security interest, over the 2007 and 2015 period. The determinants that affect the likelihood and the timing of a patent being released have been investigated. In particular, we focus on the effects of the global financial crisis and the interplay between the financial intermediary types involved in the collateralization event. Survival models have been applied and the hazard rates on the likelihood of observing a release of a security interest have been estimated. The obtained results suggest that a security interest on a patent is more likely to be released in the case of granted and younger pledged patents, when firms that pledge patents as collateral are larger, and lenders are more experienced in handling intellectual property (IP) backed transactions. Moreover, all else being equal, a release is more likely to occur for patents with higher technical merit, as captured by forward citations. On average, after the beginning of the global financial crisis, a decrease in the probability of release of a security interest is observed. This effect is smoothed for larger firms and for deals involving banks, as opposed to specialty finance intermediaries. This evidence has been discussed in light of the literature on secured lending and the financing of innovative companies.

'A major contribution to the literature on the role of intellectual property rights (IPR) for the financing of innovation. The book is extensively researched and provides compelling insights for IPR managers, technology investors and policymakers trying to promote the efficiency of capital markets and national systems of innovation.' Knut Blind, Berlin University of Technology, Germany Following the transition of industrial nations to knowledge economies, the financing of technological innovation has become a central issue in public policy, corporate finance and business management. This detailed book examines the role of intellectual property rights in facilitating the financing of technological innovation as well as the role of policy makers, investors and managers in this process. The book's central finding is that public policy plays a key role in promoting the corporate disclosure of intellectual property-related information to enhance the efficiency of capital markets. This not only reduces the costs of capital for technology-driven firms but ultimately spurs innovation and economic growth. Intellectual Property Rights and the Financing of Technological Innovation will strongly appeal to research students and academics, policy makers, intellectual property professionals, equity analysts, credit rating analysts and executives in the pharmaceutical industry.

Consider the following hypothetical. You receive a frantic call from Dan Brown, asking you for assistance. Breathlessly, he quickly provides some pertinent information about his urgent matter. An unknown author a few years ago, Brown was thrilled to finish his manuscript, The Da Vinci Code. A kind and generous friend who operated a financing company (the Creditor) provided a $50,000 loan to him in exchange for a security interest in the copyright of The Da Vinci Code. Brown read the boilerplate security agreement, granting the Creditor a security interest in the “general intangibles,” and signed the document. The Creditor then filed the necessary documents stating that it has a security interest in Brown's general intangibles. Brown later wrote a sequel to The Da Vinci Code, building on the character of Dr. Robert Langdon, the Harvard symbologist that he had previously developed. In the meantime, Brown depleted the money and defaulted on the original loan, prompting the creditor to foreclose on the copyright and sell it to the Purchaser. The Purchaser, as the new copyright owner, now asserts that Brown violated the Purchaser's copyright because the sequel is a derivative work of the original. In addition, Miramax wants to make a movie and is ready to negotiate with the current owner of the copyright, the Purchaser, instead of Brown. Brown is frustrated, believing he has the derivative right for a movie option and control over his own creative output in writing a new sequel. Brown needs your help and he has your sympathy. Unfortunately for both Brown and you, neither copyright nor secured transaction laws directly address the issues at hand. That is the current state of collateralization of intellectual property. Here, the hypothetical presents the problem of the collateralization of a copyright of a book. What does it mean to collateralize intellectual property? It is well established that intellectual property assets are core and important to the growth of the economy. Companies, small and large, create, acquire, and hold intellectual property as corporate assets. To maximize the value of intellectual property corporate assets, companies turn these assets into collateral for secured financing. Despite the pervasive practice of using intellectual property assets as collateral in secured financing, very little scholarship has been devoted to understanding the collateralization of intellectual property. The majority of the scholarship in the past twenty years has focused only on perfecting a security interest in intellectual property. Neither courts nor scholars have addressed the fundamental question of collateralization. The Dan Brown hypothetical above demonstrates that the use of copyright as collateral has hidden costs, including depriving the author of the right to create new works. This Article argues that the process of the collateralization of intellectual property lacks transparency. Consequently, the current Article 9 of the Uniform Commercial Code (UCC-9) may unfairly advance secured creditors' rights at the expense of intellectual property creators-such as authors and inventors who are the debtors-and ultimately at the expense of society as a whole. Due to these hidden costs, the ongoing process of collateralization may prevent intellectual property creators from creating future works based on their early creations. This Article identifies and critiques the collateralization of intellectual property, revealing the complexity of intersecting secured transaction law, namely Article 9 of the Uniform Commercial Code, and doctrinal intellectual property laws such as patent law, copyright law, and trademark law. The inquiry challenges the silence surrounding the pervasive use of intellectual property as collateral in secured financing and suggests changes to the existing framework on secured financing law. The Article proceeds as follows: Part II discusses the normative intellectual property rights for patents, copyrights, and trademarks and how such rights are utilized as corporate assets. Part III describes different forms of financing available for companies and the use of intellectual property in financing. Part IV explains the UCC-9 regime as the law on secured financing, focusing on the rights of both the debtor and the secured creditor in the event of default. Part V frames the existing debate on security interests in intellectual property assets and analyzes how the revised UCC-9 addresses the debate. Part VI identifies and critiques the collateralization structure and its hidden costs. Finally, Part VII offers a proposal to minimize the hidden costs, provide better notice to all parties, and promote creativity and innovation.

Most readers, especially those with car loans or home mortgages, know about "collateral"--property that the lender can take away from the borrower in the event that the borrower defaults. In low/middle income countries, it is understood that conservative lenders exclude firms from credit markets with their excessive collateral requirements. Usually, this is because only some property is acceptable as collateral: large holdings of urban real estate and, sometimes, new motor vehicles. Microenterprises, SMEs, and the poor have little of this property but they do have an array of productive assets that could easily be harnessed to serve as collateral. It is only the legal framework which prevents firms from using these assets to secure loans. In countries with reformed laws governing collateral, property such as equipment, inventory, accounts receivable, livestock are considered excellent collateral. This book aims to better equip project managers to implement reforms to the legal and institutional framework for collateral (secured transactions). It discusses the importance of movable property as a source of collateral for firms, the relationship between the legal framework governing movable assets and the financial sector consequences for firms (better loan terms, increased access, more competitive financial sector), and how reforms can be put in place to change the lending environment.