Intellectual property collateral in secured transactions
In the information age, knowledge is the dominant factor of production. Intellectual property rights – such as copyrights, trade marks and patents – and intellectual property licenses are increasingly recognised as the most valuable resources owned by enterprises. Both in developed and developing economies, there is burgeoning interest toward using these assets as collateral in secured transactions. The aim of legislators and market participants is to leverage intellectual property to reduce financing cost and facilitate access to credit, for startups and small and medium enterprises.
Since 2009, Dr Andrea Tosato has been studying the legal framework that governs the use of IP assets as collateral across a range of jurisdictions and suggesting legislative reform proposals.
In his article, The UNCITRAL Annex on security rights in IP: a work in progress (JIPL 2009), Dr Tosato analysed the draft UNCITRAL Annex on security rights in IP, at a time when intergovernmental negotiations for this international instrument were still undergoing. First, he identified the primary social, economic and legal challenges that affect the taking of security over IPRs. Thereafter, he expounded the policy choices that were being considered at UNCITRAL and hypothesised alternative normative approaches for three specific issues: the relationship between IP specialist registers and general security interest registers, conflicts between licences in the ordinary course of business and security interests over IPRs, and choice of law rules for security interests over IPRs. This article was well received and, in 2010, Dr Tosato was invited to present his research at a conference arranged by the International Chamber of Commerce in Istanbul, speaking alongside other international experts and representatives of the UNCITRAL Secretariat.
In 2011, Dr Tosato published an article titled Security interests over intellectual property (JIPL 2011) in which he explored the English legal framework governing the use of IP assets as collateral. In this paper he advanced the view that the regime for the taking of security in intellectual property rights and licences should be aligned with that generally applicable to other choses in actions and that and any reform of English personal property security law should also extend to security interests over IPRs. Alongside these overarching propositions, Dr Tosato suggested target interventions to address existing shortcomings of the English legal framework currently in force: reforming the priority rules applicable to security interests over registered IPRs, regulating the relationship between the general companies charges register and the IP specialist register and eliminating the differentiation between rules applicable to individual and companies when taking security over IPRs.
Between 2014-2019, Dr Tosato focused on the Italian legal framework for the taking of security in IPRs. His research detailed the weaknesses and inconsistencies of the Italian legal framework currently in force and then articulated legislative reform interventions to modernize the extant general personal. These findings were published in a prestigious volume edited by Prof Orkun Akseli (University of Durham) and Mr Spiros Bazinas (Senior Legal Officer, UNCITRAL) and titled International and Comparative Secured Transactions Law (Hart 2017). Subsequently, Dr Tosato analyzed the legislative reforms enacted by the Italian parliament in 2017 and 2019, leading to the publication of another book chapter in a volume edited by Prof Lucio Ghia and titled International Business Law (Wolters Kluwer 2019).
In 2018, Dr Tosato delved into the legal framework governing the use of IP licences as collateral in his article titled Secured Transactions and IP Licenses: comparative observations and reform suggestions (Law and Contemporary Problems 2018). In this paper, he offered a comparative assessment of the rules governing the taking of security in IP licenses in multiple jurisdictions, followed by detailed legislative reform proposals that delineated the fundamental components of an efficient legal regime for the use of these assets as collateral.
Dr Tosato body of scholarship analyzing the use of IP assets as collateral has had a substantial impact both at national and international levels. In 2016, responding to a consultation process initiated by the Law Commission of England and Wales (LCEW), Dr Tosato submitted a proposal aimed at reforming UK laws governing the taking of security in IPRs which was based on his published scholarship. In 2017, the LCEW published its 13th Work Programme (2018-2021) in which it included Dr Tosato’s proposal as one of its possible future projects. At the international level, UNCITRAL Model Law on Secured Transactions (2016) features many of the rules and principles that Dr Tosato has articulated in his scholarship for the efficient use of intellectual property assets as collateral.
Dr Tosato continues to study the law governing the use of IP assets as collateral and his scholarship is gradually influencing the legal reform initiatives of a growing number of jurisdictions.