If you own a patent, or some other valuable intellectual asset, you might want to use it as security to obtain a loan, or other financial support, for your business. Conversely, if you have funds that you are thinking of investing in a business that owns relevant IP, you may wish to secure an interest in the IP so that you can take ownership if the investee defaults on its obligations.These types of arrangements are perfectly legitimate. Registered intellectual property rights, such as patents, trade marks and registered designs, are like any other property in that they can be used as collateral, mortgaged, and otherwise dealt with as securities.
It is preferable that any such security interests be officially and publicly recorded. There are a number of reasons for this. For one thing, if somebody is considering buying or licensing a patent, they ought to be able to find out whether any third party holds an interest in it (in the same way that, when buying a second had car, you need to find out whether it is still under finance). Furthermore, when something goes wrong, such as the rights-holder declaring bankruptcy, there should be some simple way for a party with an interest in the assets to establish its priority. This is particularly important in more complex cases, in which a number of investors and creditors may have competing claims.
But how, and where, should you record any interests in Australian patents or other registered IP rights?
Tags: Australia, Licensing, Security interests
