Teo Chee Hean, Deputy Prime Minister of Singapore, has announced a government programme to encourage banks to accept intellectual property rights (including patents) as collateral for business loans. Under the new finance scheme, which is set to launch in the first quarter of 2014 and details of which are yet to be worked out, the government plans to partially underwrite the value of companies' patents for the purposes of loan collateral.

Jim Greene-Kelly, Patent Attorney and Singapore Office Managing Partner at Marks & Clerk, comments:

“The new financial scheme announced by the Singaporean government is a step in the right direction for Singaporean businesses and presages the widespread use of intellectual property rights as assets in their own right, not just as defensive tools. IP rights can be traded like other kinds of assets, but they can also be licensed out and monetised in a range of uniquely beneficial ways.

“The Malaysian government announced a similar move in its recent budget, setting aside funding of RM200 million (approximately USD65 million) for an IP financing scheme, and our Asian offices are seeing a huge increase in non-traditional uses of intellectual property rights, as the region follows the lead established by the US, for example. Our consultants, who value IP rights so they can be monetised and securitised, have consequently experienced a real upturn in business coming from Asia.

“IP rights can be used to generate substantial income through licensing and sale, and a thorough review of an organisation’s IP portfolio now forms a key part of the due diligence process for transactions such as investment, mergers and acquisitions. Whilst it is particularly important for start-up companies to know the value of their IP, many high-profile multi-national companies have also securitised their brand rights in order to plug pension deficits.”