The currently funding institutes such as banks are hesitated to undertake the pledging business on intellectual property, it could be due to the lacking confidence on intellectual property or the overestimation of the high uncertainty of intellectual property, the inefficiency to cash out the pledged intellectual property assets etc.. In this article, the previous cases on intellectual property securitization worldwide were studied, in addition, the issues and suggestions for the future legislation are reviewed, and the adoption of the current finance asset securitization is discussed. My personal suggestions on securitization legislation for biomedical patent are stated and specifically explained the protection mechanism. Considering the characters of biomedical patent (such as the huge investments on equipments, long research period, complicated clinical trials and procedures, strict medicinal laws on manufactures and sales certificates approval, marketing and advertisement regulations etc.), parties involved in the securitization mechanism will not risk their qualified patents for the short term cash flow, which means lower opportunities on fraud or conspiracy comparing to the financial assets securitization. The overseas fund raising and guarantee institutes were presented. Sincerely hope this article shall contribute to the future legislation on intellectual property securitization, starting with biomedical patent securitization.
Key words: Intellectual property; Securitization; Fund raising; Asset transfer; Biomedical patent
There are various financial arrangements for companies to convert biomedical patents into cash, such as sales from the derivative products or patents, patent licensing, joint ventures based on patent as pledges assets, strategic alliances, spinning out to form a new company, donation of patent for tax write-offs and securitization. However, the innovative financial tool on patent securitization does attract attention as shown in Figure 1, as securitization is one of the significant advancements in finance management, as a technique which revolutionized the bank as an intermediate. Securitization is also a funding mechanism. Biomedical technologies advanced human life and the innovations did generate benefits towards the better quality of human life. As an updated financial tool, intellectual property backed asset securitization will enhance the development of technologies. Intellectual property backed asset securitization is a newer type of asset backed securitization, providing borrowers with cheaper sources of funds. Furthermore, borrowers, originators, investors will benefit from the advantages of this structured financial tool, since intellectual property backed asset securitization leads to a more efficient financial market and reduce costs of intermediation for both loan originators and borrows.
There are many concerns for the securitization implemented for intellectual properties, such as the statutory and legal mechanisms which presently do not exist in Taiwan, however, the asset-backed securitization on real estate and financial derivative products are already launched in Taiwan. For biomedical patents, securitization is a newer funding source and the biomedical patents have more profound foundations while comparing to patents in other industries. Regarding the foundations for biomedical patents, at least, a physically existed biomedical company with factory or laboratory is a must, and the biomedical technologies somehow build up higher competitive barriers as technologies development is a time consuming with huge capital demanding business.
Although there already are existed various innovative financial derivative products and flexible financial measures for intellectual properties, intellectual property backed asset securitization offers unique benefits, such as funding with lower cost for individual patent owner or company assignees, which is a trendy fashion for capital management. …