VZCZCXYZ0000
RR RUEHWEB

DE RUEHGV #0217/01 0721612
ZNR UUUUU ZZH
R 131612Z MAR 09
FM USMISSION GENEVA
TO RUEHC/SECSTATE WASHDC 8125
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS GENEVA 000217 
 
SIPDIS 
 
STATE FOR EEB, IO/EDA 
COMMERCE FOR USPTO 
 
 
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 
occurs in many countries in a range of industries using a variety of 
financial mechanisms, but success depends on legal and regulatory 
support, as well as the awareness of the banking industry and 
development of capital markets.  IP financing has great potential in 
developing countries, particularly small and medium-sized enterprises 
which rely upon their knowledge and IP assets as the main source of 
funding.  In this context, IP financing can provide an accessible 
source of relatively inexpensive funding, and encourage further 
innovation and creativity. 
 
¶6.  In many developing as well as developed countries, however, levels 
of awareness of IP assets-based financing remain 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 
 
STORELLA#