The first step will be to develop common terminology, so that lenders and businesses can talk the same language. The finance and IP worlds are both full of terms not readily understood by the lay person and which can be misused or confused. As a first step to developing a common understanding the IPO, working with businesses and the finance community, will develop a glossary of accepted definitions to be used when describing and valuing IP and intangible assets.The SEC could jumpstart a similar activity here. The databank envisioned by the UK IPO is similar in format to the data points the SEC now requires to be disclosed for ABS portfolios. Based on this experience, the next step is for the SEC to broaden the asset class covered by the new rules to include disclosure of information on intangible assets (starting with IP) used a collateral in securitized portfolio of loans. For example, an ABS using commercial loans as the underlying asset should be required to disclose information on any patents pledged as collateral on those loans. Any valuation of those patents used by the lender on those loans should also be disclosed. Such disclosures would set the template for lending institutions to use regardless of whether or not the loan is eventual part of an ABS offering. That would go a long way to helping both lenders and borrowers understand and better utilize the value of intangible assets.(Cross posted from The Intangible Economy)
This common language will form a foundation on which we will develop templates and guidance which will help business accurately to document their IP assets in a way that supports the decision making of a potential lender. We recognise that most lenders already use standard templates or application forms for client businesses seeking finance. We will therefore seek to produce templates for IP related assets that can either be directly incorporated into this existing documentation or which can be used as a databank for information likely to be required by lenders.
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