Emerging Financing Strategy: Using IP Assets as Collateral

Legal Strategies for Borrowers and Lenders in Asset-Based Lending Transactions

Recording of a 90-minute premium CLE webinar with Q&A

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Conducted on Wednesday, October 21, 2009

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Course Materials

This seminar will examine the use of intellectual property assets in arranging financing, which has emerged as a valuable alternative financing strategy in the current economy. The panel will review key legal issues for borrowers and lenders to minimize the risks associated with the use of IP as collateral.

Description

Asset based lending with IP collateral may be ideal for a distressed business whose IP collateral is more certain than its financial performance or cash-generating capabilities. In the bankruptcy setting, this could very well be the company’s only vehicle for debtor-in-possession financing.

From the lender's perspective, IP assets have become a more substantial portion of a company’s total assets. In the current economic environment where balance sheets of many businesses are thin, IP is an essential piece of the collateral pool available to borrowers and lenders.

There are unique risks to lending against IP that lenders must take steps to mitigate. For example, there are special rules governing the perfection of security interests in IP assets due to the overlap between UCC Article 9 and federal law governing IP assets like patents.

Listen as our authoritative panel of attorneys discusses the key factors for businesses to consider in obtaining IP asset-based financing and what borrowers and lenders must do to mitigate risks and protect their interest in the event of default.

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Outline

  1. Key concerns for businesses using IP as collateral
    1. Weighing the risks and benefits
    2. Well-managed IP portfolios
    3. Developing an exit strategy
  2. Key concerns for lenders and investors
    1. Weighing the risks and benefits
    2. Perfecting security interest in IP assets
      1. UCC Article 9 v. federal law
      2. Copyrights, trademarks, and patents
      3. Trade secrets, software licenses, domain names and other non-registrable rights
    3. Developing an exit strategy
    4. Borrower distress/default

Benefits

The panel will review these and other key questions:

  • What steps must a business take to leverage its intangible assets value?
  • How does perfecting a security interest in IP assets differ from perfecting an interest in tangible assets?
  • What steps should lenders take to protect their interest in the event of default?

Faculty

Scott J. Lebson
Scott J. Lebson
Partner
Ladas Parry

He counsels clients on commercial transactions relating to the worldwide acquisition, sale, licensing, exploitation and...  |  Read More

Christopher G. Dorman
Christopher G. Dorman
Partner
Phillips Lytle

He concentrates his practice in the area of banking and commercial law, including secured lending, asset based...  |  Read More

Ron Ben-Yehuda
Ron Ben-Yehuda
Partner
Gibson Dunn & Crutcher

He has negotiated numerous sales of IP or of businesses that hold significant IP and run the associated IP audits or...  |  Read More

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