The 5th edition of
CII’s (Confederation of Indian Industry) flagship annual Intellectual Property (IP) conference focused on creating IP-led
technology for a $5 trillion economy has recently released a report showing
global examples to represent the virtues of using IP as collateral for
financing.
Visualized by CII
and co-created by Duff & Phelps, the report said that being the
third-largest economy for start-ups in the IP industry, including technology
and pharmaceuticals, India is standing at the verge of IP revolution. Although
the government initiatives like the release of the National IPR Policy in 2016
to spur interest in Intellectual Property Rights (IPRs) commercialization have been
institutionalized, India’s IP financing process is still quite slow.
What are the reasons
for the slow pace of IP financing In India? As the report said, unwillingness
to treat IP as a business asset, challenges in IP licensing, lack of uniformity
in the valuation of IPs, insufficient market, and legal infrastructure to
monetize IP assets are some of the main reasons for the slow pace of IP
financing in the country.
What is IP-backed
financing? IP-backed financing refers to the approach of using IP assets to
achieve access to credit. Nowadays, more and more MNCs (Multinational
Corporations) and SMEs (Small and Medium Sized Enterprises) are selling their
IP assets in exchange for finance. Besides, lending institutions worldwide are
considering IP as collateral while extending loans. In general, IP assets are
used to secure asset-based loans. However, if collateralized, then they can be
used to increase the available credit. Note that in the cases where borrowers
guarantee their IP, no matter patents, trademarks, or copyright, as collateral,
the collateral pool upsurges in value and potential for a successful loan. In
simple words, with ideas and innovations emerging as the key driver of the
businesses, financing base that supports the IP’s commercialization is
remarkably crucial.
Mr.Arvind Thakur,
Chairman, CII National Committee on Intellectual Property & Senior Advisor
to the Board, NIIT Technologies, while commenting on the report, said that
using IP as collateral will help the industries and banks to develop a good
understanding of the subject matter and gain profits.
He continued by
saying that according to CII’s belief, IPRs should be at the central stage for
competing in the world of Artificial Intelligence (AI) in a meaningful way.
Moreover, it is expected that this would open new scopes of financing in India.
Following Mr.Arvind,
Aviral Jain, Managing Director Valuation Advisory Services and Co-Head,
Restructuring, Duff & Phelps, said that the nation needs to have a
mechanism for obtaining financial support and a robust marketplace. India can
take lessons from IP friendly nations such as Korea and Singapore that have taken
steps to create an IP financing ecosystem. The schemes introduced to flourish
the IP sector in these countries benefit SMEs, Start-ups, and even lending
institutions.
Other Key
Findings of this Recently Launched Report Are As Follows:
- When the regulatory environment is emerging
globally, and initiatives to give impetus to IP-based financing are
underway, economies like Singapore display a sophisticated regulatory
environment and a robust infrastructure for IP financing.
- Over the past five years, IP financing
transactions in areas where IP is used as collateral have declined
globally.
- There’s an increase in global PE (private equity)
funds that are not just investing in IP-based companies but also helping
to protect IP in certain situations. For more visit: https://www.trademarkmaldives.com
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