Can businesses use intellectual property as collateral?

Using intellectual property as collateral is an effective financial solution, helping businesses take advantage of the hidden value of inventions, trademarks, and copyrights to access capital. In the context of an increasingly developing knowledge economy, mortgaging intellectual property rights not only helps increase the value of the business but also expands business development opportunities. This is a method that helps businesses be more flexible in financial management. Follow the article below for more details about this issue.

What are the regulations on mortgaged assets?

According to Clause 1, Article 317 of the Civil Code 2015, mortgage of property is the use of property owned by one party (hereinafter referred to as the mortgagor) to ensure the performance of obligations and not hand over the property to the other party (hereinafter referred to as the mortgagor). hereinafter referred to as the mortgagee).

Mortgage of property is a measure to secure the performance of obligations specified in the Civil Code 2015. The mortgaged property is held by the mortgagor unless the parties agree otherwise.

Article 318 of the Civil Code 2015 specifically regulates the scope of mortgaged assets. When mortgaging entire real estate or movable property with ancillary items, the accessory items are also part of the mortgaged property. If a portion of the property is mortgaged, the accessories attached to that portion are also subject to the mortgage. In the case of a mortgage of land use rights, assets attached to the land owned by the mortgagor are also within the scope of the mortgage.

The law also regulates insurance for mortgaged property. The mortgagee is obliged to notify the insurance organization that the property is being mortgaged. When an insurance event occurs, the insurance organization will pay the insurance money directly to the mortgagee.

These regulations create a legal foundation for the use of assets, including intellectual property, as collateral. However, due to the specific characteristics of intellectual property, the application requires more specific instructions.

Intellectual property and its ability to be used as collateral

Intellectual property is the product of creative intellectual activity in the fields of science, literature, art and industry. According to the Law on Intellectual Property 2005 (amended and supplemented in 2009 and 2019), intellectual property includes copyright, rights related to copyright, industrial property rights and rights to plant varieties.

Article 115 of the Civil Code 2015 defines intellectual property as a form of “property rights”. This creates a legal basis for using intellectual property as collateral. However, not all intellectual property can be mortgaged. Only intellectual property that is capable of transferring ownership and has a determinable economic value is allowed to be mortgaged.

Using intellectual property as collateral brings many benefits to businesses. It helps businesses raise capital without using tangible assets. This is an effective solution for technology companies and creative startups – units that often have great value in intellectual property rather than physical assets.

Specific regulations on mortgage of intellectual property

Although the Civil Code does not have specific regulations on mortgage of intellectual property, a number of legal documents have mentioned this issue:

Article 17 of Decree 21/2021/ND-CP stipulates that owners can use the following property rights to ensure the performance of obligations:

• Property rights for copyright and related rights;
• Industrial property rights;
• Rights to plant varieties;
• Right to own and use scientific research results, technology development and transfer;
• Other rights with monetary value arising from intellectual property, information technology, scientific and technological activities;

Article 11 of Decree 76/2018/ND-CP also allows the use of the following intellectual property rights as collateral for loans:

• Right to own and use the results of scientific and technological tasks;
• Rights to own and use intellectual property objects;
• Other rights arising from research results and intellectual property objects;

The use of these intellectual property as collateral must comply with the provisions of law on secured transactions and the regulations of the lending organization.

Procedures and notes when mortgaging intellectual property

When businesses want to use intellectual property as collateral, they need to pay attention to the following issues:

• Clearly identify the type of intellectual property and ownership: Businesses need to prove legal ownership of the intellectual property they want to mortgage.
• Asset valuation: It is necessary to have a specialized unit to accurately evaluate the value of intellectual property.
• Mortgage registration: The mortgage of intellectual property must be registered with a competent authority such as the National Office of Intellectual Property.
• Mortgage contract: Prepare a detailed mortgage contract, clearly defining the rights and obligations of the parties.
• Comply with legal regulations: Ensure that the mortgage does not violate regulations on transfer of intellectual property rights.

Businesses should consult with legal and financial experts to ensure the process of mortgaging intellectual property runs smoothly and efficiently.

Long Phan Services advises and supports the use of intellectual property for mortgage

To support the use of intellectual property as collateral, Long Phan provides consulting and support services on:

• Comprehensive consulting and support on intellectual property mortgage: From assessing value, completing legal documents to connecting with credit institutions, we accompany businesses throughout the process.
• Helps businesses maximize the value of intellectual property: Accurately evaluate, complete documents, connect with investors, protect property rights.
• Comprehensive service on intellectual property mortgage: Evaluation, consulting, legal support, connection, and rights protection.
• Customer representatives connect with credit institutions.
• Representatives of businesses and customers carry out comprehensive procedures.

Using intellectual property as collateral opens up new opportunities for businesses to raise capital. However, this process requires careful preparation and strict compliance with legal regulations. If you need detailed advice on intellectual property mortgage, please contact the hotline 0906735386 Get support from our experts.