Financing using IP rights
A state of emergency was declared on April 7 in response to the COVID-19 outbreak which was subsequently extended until the end of May. This has caused a broad economic slowdown leaving many companies in need of financing, including start-ups with valuable and unique technology and intellectual property (“IP”) rights. Financial institutions may require additional security before agreeing to reschedule or extend additional loans, causing these companies to consider collateralization of their IP rights. Security interests may also be established over a company’s total assets, which may largely consist of IP rights. However, despite their value, IP rights are not currently actively used in financing.
Against this background, this alert provides an overview of financing using IP rights and the establishment of security interests over IP rights. It also summarizes the legal issues and practical points related to the establishment of security interests over IP rights.
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