UK primed for IP-backed finance, say WIPO and UKIPO
UKIPO announces measures to raise profile of IP financing | UK banks start to offer IP-backed loans but ‘much further to go’ before option becomes mainstream.
The UK meets the right conditions for IP-backed lending to work at scale, according to a report launched yesterday (March 19) by the World Intellectual Property Organization (WIPO) and UK Intellectual Property Office (IPO)
This is down to the country's strong IP regime and numerous innovative businesses with high-growth potential, said the report.
“Country Perspectives—The UK’s Journey” is part of a series of reports launched by the WIPO in 2022 to help better understand and promote the emerging area of IP-backed lending.
The report found that UK banks were beginning to offer IP-backed loans, with recently launched products from NatWest and HSBC UK, but noted that there was “much further to go” before IP financing became mainstream.
It also identified that IP-intensive industries accounted for more than a quarter of the UK’s output, around £300 billion a year, and that intangible assets could comprise around 70-80% of a typical firm’s value.
A well-established legal framework for IP in the UK that also enabled security to be taken over movable, intangible assets, supported the scalability of IP finance, the report said.
The jointly-produced report cited challenges to businesses using IP financing as low levels of awareness among financiers and industry, a lack of secondary markets for IP assets, confidence in IP valuation, and limited visibility of IP in business reporting.
IPO to establish advisory group
Alongside the report, the IPO announced a series of measures it would take to raise the profile of IP financing and identify avenues to improve investment into IP-intensive firms.
These included creating an advisory group made up of experts from the financial sector, IP industry, and academia to help shape policy in the area; and producing an annual report with metrics on using IP to access equity and debt finance.
The office also said it would review the process of banks registering their security interests in patents, trademarks, or designs before the IPO when IP assets are used as collateral to secure loans.
WIPO director general Daren Tang, who launched the report alongside the UK’s Minister for AI and IP Viscount Camrose, said: “Intellectual property is not just a legal right or a business catalyst, but also a financial asset. IP financing will unlock new paths for enterprises to grow, but still feels unfamiliar to many key stakeholders.
“It is therefore time for us to move this conversation beyond IP specialists and experts to get those in finance, investment, accountancy and valuation involved in moving this piece forward together.”
Matt Dixon, president of the Chartered Institute of Patent Attorneys (CIPA), said: “High-growth businesses may often own few tangible assets, but can be rich in IP and intangible assets.
“These businesses can find it difficult to use their traditional assets as collateral to secure growth funding, leading to a potentially sizeable funding gap for fast-growing, but asset light, businesses. IP-backed lending could play an important role in addressing this gap.”
