Beijing champion intellectual property management limited [Expert Advice]

Last updated : Sept 3, 2022

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did you know that you can actually use your intellectual property as collateral well kinda i'll explain i'm khalila reynolds and this is money moves ja brought to you in partnership with exim bank's business advisory service giving you the small and medium enterprises the tools to grow your business i'm joined again by marcus gough he is the legal officer at the jamaica intellectual property office jaipur welcome back marcus thank you so can you really use intellectual property to get a loan yes in theory in theory we're not yet at the stage where we see it happening much but yes since 2013 the government passed the security interest in personal property act we call it zippo for sure sippe which was intended to open up the available forms of property that can be used as collateral for a loan it includes ip your trademarks your copyright your designs your patents etc can be used um if accepted by a financial institution as cultural foreign so 2013 that's seven years ago yes have we had examples where financial institutions actually did accept intellectual property as collateral uh since 2013 i am not aware of it being generally acceptable right reason being that we understand that there are some concerns on the part of financial institutions about you know their ability to be able to collect on loans which basically are faulty you know people have not been able to repay their loans and so one of the concerns is how will be as the banks they say be able to recover on unpaid loans and so we're now currently working on a project um that we will have in the near future an ip evaluation um platform or or or formula that we hope to use in jamaica that will be accepted by the banks to have ipv be generally accepted as cultural for everyone and now that brings me to my next question because i'm here wondering how do you even value your intellectual property how do you know what it's worth if you wanted to present it to a bank or put it on your balance sheet how do you know how much it's worth right right right again very challenging you know and of course there are several answers to that question the main methods used generally tend to be based on looking at the market value um or the income approach or the cost approach you know which again are general accounting principles that have been used for other kinds of assets um so for iep if you look at for example the market approach we're going to look at what is the uh net value of the asset on the market today so that would then take into account the kinds of income being earned by the asset right in terms of the flows whether it be for music for trademark licenses for sales etc and basically ascribe some value based on those current market values right so that's the market value method yes yes i mean it's not again perfect because we don't have a market in jamaica where there is a wholesale buying and selling of ip like we do for example cars and also if you have for example a loan based on your car you default on your loan the bank will sell your car and pretty much know how much they'll get for it for the ip because you don't have a lot of buying and selling it's not easy for the banks to necessarily know how much they'll recover on the open market for the sale of your ip and so that's part of the problem we have currently mm-hmm so what are the other two methods that you mentioned right so the cost approach would be based on the cost that the asset was purchased or sold you know um or the cost that the owner puts on the asset so again if you are let's say an artist you have a piece of artwork you've done you can value it at 500 000 right that would still not be connected to the market and so they still have that problem of how would the bank be able to to guarantee that they will be able to recover anything near that on the open market and so that approach also has a shortcomings so that would be how much you would sell the item for yes so much at the cost and there's a third method what was that one third one is the income approach income approach no is where you'd have to show to the bank yes all of your revenue was earned so let's say you have um a portfolio of copyright works you are an artist you have um 10 songs out there you can show that you have been earning twice per year for the last 10 years um x amount of sums of money you're being paid as royalties for example you can use that to show that this asset is earning x amount of money for me per year and therefore its value is going to be calculated based on the cost and the value of its earning capacity and so that one is probably i would say more practical for us in the marketplace but still we have to work out with the banks what kind of safeguards they would want to see before they feel more willing to lend on that kind of asset so can you put your intellectual property on your balance sheet as an asset you should do so not only you can you should do so because it is an asset in its own right right um of course the value that you put there yes we will have to be justified based on all these methods but still you're entitled to do so because it's going to be a separate value from what for example is your physical stock right let's say you own a manufacturing business you're producing fruit juices right you have stuck in the plastic bottles you have stuck in the juice and the equipment and machinery but you also have a lot of value in your trademarks that you have for your business and so you should put it on your balance sheet and your profit and loss statement as well so do i come up with those numbers myself who may consult to try to figure this out right at present i would say the best bit would be an accountant who is familiar with these kinds of assets to give approximate value for you unfortunately in jamaica it's not used much is it no and so we're hoping with this new product that we have now in place that we'll have by the end of next year iop evaluation framework the banks can buy into the boj the exim bank etc as well as the creative industry so it will all feel more comfortable with that in place hopefully by next year okay we look out for that next year and we will have you back on okay so in preparation for next year marcus yes what can businesses do right now what they should do is to keep proper records of all of their ip assets you know so firstly i'll probably say do an ip audit you know look in your business to see what you have as i list all your copyright works your designs your trademarks your potential patents you know exactly what is your inventory of your ip secondly i would say keep records keep records of your registrations your income statements if you receive royalties any license fees you've received um any costs you spend for your design and logo development and trademark etc keep them so that if you if and when you want to go to a bank you can show them all that you have to prove that only your income from your ip as well i know in jamaica the banks are are reluctant at this point for the reasons that you stated but internationally how well is ip received as collateral it's it's growing i mean c

Thanks for your comment Kelley Laprise, have a nice day.
- Deane Economus, Staff Member

galway was established as an intellectual property agency in 2004 specializing in patents trademarks copyright prosecution litigation and ip enforcement govern currency has more than 300 patent and trademark attorneys as well as a group of leading well-known ip lawyers which enables the firm to handle all technology fields and a diverse range of ip services after 16 years of evolution our firm has become one of the top 10 ranking law firms in china which is particularly professional in global ip matters our attorneys and lawyers have extensive experience nationwide and overseas prosecuting patents trademarks and copyrights particularly we pride ourselves in the capability of representing clients in multinational lawsuits infringement of patents disputing trademarks copyright and unfair competition fields for years we have been dedicated to providing legal services within ip to our esteemed client as a main member of the aippi yinta and the cips we participate international exhibitions and pay a visit regularly to keep close contact with foreign allies by cherishing each relationship with overseas partnerships we have cooperated with ip agencies for more than 168 countries and districts across the world we have served major famous brands from domestic and foreign such as bensley lenovo and china mobile our mission is creating more value towards clients with wholeheartedness it will be our great honor to meet and make acquaintance with you during aippi event 2021 thank you for your attention to our firm and gobo is always looking forward to working together with you

Thanks Bryanna your participation is very much appreciated
- Deane Economus

About the author

Deane Economus

I've studied galaxy formation and evolution at Beloit College in Beloit and I am an expert in biogeochemistry. I usually feel frustrated. My previous job was game runner I held this position for 20 years, I love talking about rugby league football and photo: leslie cross. Huge fan of Bobby Flay I practice horse riding and collect petroliana.