It goes without saying that IP rights are highly valuable assets, particularly for companies specialising in proprietary technology or using a valuable brand. The patents or trademarks protecting such assets can either be used by the company itself or licensed. In addition, they can also be used as security, like any other type of (tangible) property.

Until recently, however, there was no legal certainty under Belgian law regarding the possi-bility to pledge IP rights. Indeed, the Civil Code required physical dispossession of the pledged asset, which raised a number of practical issues with respect to intangible assets, such as IP rights.

Fortunately, the provisions of the Civil Code on pledges were recently amended in order to address this issue.

The possibility to pledge IP rights is now expressly provided for and dispossession is no longer required. A security register must be created, in which all pledges are recorded in order as to ensure their enforceability against third parties.

In addition, like any other transaction involving registered IP rights (such as trademarks, designs, patents and plant breeder’s certificates), the pledge should be recorded in the corresponding IP register in order to be enforceable against third parties.

The pledge of an IP right may be useful to guarantee the proprietor’s obligations to various creditors. More specifically, a pledge can be used to guarantee the proprietor’s obligations to its licensee. If the licensor fails to fulfil its obligations, the licensee can sell the licensed IP right or, if the pledge agreement so allows, secure ownership of the right.

The new provisions of the Civil Code on pledges are expected to enter into force in December of this year.