Date: 12-05-2021 by: Banca IP Law Firm
It’s difficult to use intellectual property as collateral for a loan, isn't it?
VTV.vn - Under the current law, intellectual property rights can in principle be used in the legal form of as collateral for a loan. However, given the fact that the enterprises have been faced many difficulties when using such property as collateral.
According to Civil Code Law and Decree No. 163/2006 of the Government, the collateral can be a property including Intellectual property rights, or Land Use Rights. It means, just like any other kind of property, Intellectual property rights can be used as collateral. However, given the fact that it is really difficult for enterprises to have a loan in this way.
On the bank side, the use of intellectual property assets as collateral at credit institutions has limitations because they are intangible assets. In case, the enterprise cannot pay their debts, the banks are difficult to assign the patents to the third party.
“Currently, the disposition of assets is facing many difficulties because there is no institution that can evaluate the intellectual property assets as collateral for price-fixing. In addition, when dealing with the intellectual property assets, the banks and credit institutions face a lot of difficulties in the separation of property is to ensure intellectual property to dispose of the intellectual property assets which are dependent from other tangible assets” said Mr. Nguyen Tuan Anh - Department Chief of Monetary Forecasting & Statistics The State Bank of Vietnam.
“The main reason is the inconsistencies/gaps between laws and regulations. If the credit institutions would accept such collaterals while the court would not recognize such property assets, the credit institutions would bear excessive risk” said Mr. Can Van Luc – Member of National Monetary Finance Council.
To resolve the existing problem in price evaluation of the IP rights, it is necessary to have professional appraisals. Especially, the enterprise owning the IP rights must turn the IP rights into new products, commercial services so that they can be used as collateral for a loan from banks or investment funds.
Translated by BANCA Co., Ltd.