Identifier
Created
Classification
Origin
09GENEVA218
2009-03-13 16:17:00
UNCLASSIFIED
US Mission Geneva
Cable title:  

WIPO on Intellectual Property Financing

Tags:  ECON KIPR WIPO 
pdf how-to read a cable
VZCZCXYZ0000
RR RUEHWEB

DE RUEHGV #0218/01 0721617
ZNR UUUUU ZZH
R 131617Z MAR 09
FM USMISSION GENEVA
TO RUEHC/SECSTATE WASHDC 8127
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
UNCLAS GENEVA 000218 

STATE FOR EEB, IO/EDA
COMMERCE FOR USPTO

SIPDIS

E.O. 12958: N/A
TAGS: ECON KIPR WIPO
SUBJECT: WIPO on Intellectual Property Financing

UNCLAS GENEVA 000218

STATE FOR EEB, IO/EDA
COMMERCE FOR USPTO

SIPDIS

E.O. 12958: N/A
TAGS: ECON KIPR WIPO
SUBJECT: WIPO on Intellectual Property Financing


1. SUMMARY: At a WIPO meeting on Intellectual Property (IP) Financing,
participants highlighted national experiences, discussed challenges in
using IP for financing, and explored solutions to those challenges.
END SUMMARY.


2. The World Intellectual Property Organization (WIPO) hosted an
Information Meeting on Intellectual Property (IP) Financing at WIPO
Headquarters in Geneva on March 10, 2009. The meeting was open to the
public. Presentations were given by academics and specialists in the
field of IP financing, representatives from industries, banking
institutions, and officials working on the UNCITRAL (United Nations
Commission on International Trade Law) Legislative Guide on Secured
Transactions and on security interests in IP rights. The challenges in
leveraging IP for financing include: sound valuation of IP for
securitization; lack of understanding from the financial community to
use IP secured financing; and lack of an adequate legal framework for
financing IP assets. On-going work at UNCITRAL is attempting to
address the last challenge. WIPO plans to play a role to address the
other two challenges, in partnership with other relevant institutions.


3. In the current uncertain economic climate, IP financing (the use of
IP assets to gain access to finance) is of growing economic importance.
Global commerce in the emerging IP asset class is worth an estimated
USD 300 billion worldwide annually, and some 80 percent of corporate
value today is represented by intangible assets. The financial
potential of IP assets is currently limited, however, by financial
systems and policies that are still largely geared to dealing with
tangible assets.


4. For some years, deals involving the securitization of intangible
assets have enabled owners of IP rights to borrow money more easily and
safely from lenders. IP asset-backed securitizations are most common
in the film and music industries, but the practice is increasing in the
biotechnology and software industries. Some high profile examples of
such transactions include the securitized royalty streams on the
copyrights owned by famous musicians. For example, in 1997, David
Bowie issued 10-year bonds on the basis of future royalties on
publishing rights and master recordings from 25 pre-recorded albums,
raising USD 55 million. The purchaser of the bonds gained the right to

receive future royalties from BowieQs albums until the principal plus 8
percent annual interest was repaid. Another example is Nickolas
Ashford and Valerie Simpson, songwriters and producers of hit songs
including QAinQt No Mountain High Enough,Q who used the copyright on
247 of their songs as assets to back bonds, raising USD 25 million.


5. At the WIPO Information meeting, it was noted that IP financing
occur in many countries in a range of industries using variety of
financial mechanisms, but success depends on legal and regulatory
support, as well as he awareness of the banking industry and
developent of capital markets. IP financing has great poential in
developing countries, particularly smal and medium-sized enterprises
which rely upon their knowledge and IP assets as the main source of
funding. In this context, IP financing can provid an accessible
source of relatively inexpensive unding, and encourage further
innovation and cretivity.


6. In many developing as well as develoed countries, however, levels
of awareness of IP assets-based financing rmain low, and progress is
needed to tap this potential. The issue is the subject of
international policy development at UNCITRAL. In 2000, UNCITRAL
established a Working Group to address security rights in personal
property, including intangible assets. The Working Group was given the
mandate to develop recommendations for an efficient legal regime for
security rights in goods involved in commercial activity, including
intangible assets, and to identify the issues to be addressed,
including the form of the instrument and the exact scope of assets that
could serve as security.


7. The decision to undertake work in the area of secured credit law
was taken in response to the need for an efficient legal regime that
would remove legal obstacles to secured credit and could thus have a
beneficial impact on the availability and the cost of credit. In 2007,
UNCITRAL concluded a Legislative Guide that contains recommendations
for a uniform legal regime for secured financing, which also covers IP
financing.


8. The WIPO Information Meeting raised awareness among Member StatesQ
copyright and industrial property offices, and the wider IP community,
of the opportunities and challenges of IP financing by drawing
attention to current practices in different countries and different
industries, including in the copyright, patent and trademark fields.
The meeting also highlighted the ways in which improvements in laws or
financing practices could assist IP rightholders to manage their IP
assets for greater value. WIPO plans to assist Member States in
setting-up appropriate national strategies in the field of IP. WIPO
has developed a questionnaire for Member States to answer concerning
their policies and laws on IP financing. Responses to the
questionnaire will be distributed to Members in June 2009.


9. Further information, including the presentations, is freely

available online at: http://www.wipo.int/meetings/en/2009/ip_fin_g e_09
program.html

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