Securitization of intellectual property : a legal analysis

Abstract

Traditionally, tangible assets such as land, houses and natural resources were practically the only representation of economic strength. In today's knowledge economy the value of IP assets is being realised by companies globally. Technology products, brands and information, protected by copyrights, patents and trademarks are playing a fundamental role in companies’ commercial worth. An emerging area in this direction is the securitisation of intellectual property assets. Despite opening new grounds for the market of IP-backed securities, IP-backed securitisation remains only a small portion of the total asset backed securitisation industry. Aimed at finding reasons behind this fact, the focus of this study is based on the premise that successful IP-backed Securitisation depends on the mitigation of legal and commercial risks, complimented by a correct valuation of the IP backing the securities. Guided by these issues, an analytical review of the legal fundamentals, including the working structure of the SPV, bankruptcy, “true sale”, fair-use, property title, transfers, registration and valuation was carried out, through which the study strived to come to terms with the challenges and risks. With an analysis of these legal and commercial issues linked to the scenario in Malta the study came out with its own considerations. Arguments raised show that despite numerous risks, the array of benefits securitisation offers will eventually be a factor for IP-backed Securitisation to make the next step into the well established traditional securitisation market.