Patent Office Announces "Opening of the 10 Trillion Won Era in Intellectual Property Finance"

The scale of intellectual property (hereinafter IP) finance has exceeded 10 trillion won. IP finance allows companies to secure funds by obtaining collateral loans, investments, and guarantees based on the future value of IP such as patents they hold.

According to the Korean Intellectual Property Office (KIPO) on the 16th, as of the end of August, the outstanding balance of IP finance was recorded at 10.0211 trillion won. The IP finance balance is classified into ▲IP collateral loans of 2.2503 trillion won ▲IP investments of 3.5027 trillion won ▲IP guarantees of 4.2681 trillion won.

In particular, 84.2% of companies using IP collateral loans are non-prime companies with low credit ratings (BB+ grade or below), confirming that IP collateral loans have played a useful role in supplying funds to low-credit companies with excellent technological capabilities.

So far, KIPO has established an institutional foundation by expanding IP collateral loans from policy banks to commercial and regional banks, and introducing the ‘Collateral IP Recovery Support Project’ to reduce the risk of banks recovering collateral IP.

Additionally, to use IP finance, companies must undergo IP valuation, and KIPO has supported the costs of this essential process. The government budget (Mother Fund patent account) has been invested to create IP funds, serving as a catalyst for IP investment. IP valuation calculates the value of the IP held by a company in terms of grade or amount, becoming an essential gateway for using IP finance.

KIPO plans to further expand support to resolve difficulties faced by companies using IP finance. First, to prevent defaults on IP collateral loans, monitoring of signs of default among companies using IP collateral loans will be strengthened, and a proactive default prevention system will be established by linking IP support projects with IP investment and guarantees to support companies.

Support for the normalization of distressed companies will be provided through the Sale and License Back (SLB) system, and cooperation will be promoted with the rehabilitation courts, Ministry of SMEs and Startups, Korea Credit Guarantee Fund, Korea Asset Management Corporation (KAMCO), and others to enable funding through restructuring and re-startups. SLB is a system that allows distressed companies to continue their business by granting a license to use the IP even after selling the collateral IP to a recovery support organization.

Kim Wanki, Commissioner of KIPO, said, “IP finance plays an important role in enabling companies to secure funds and lay the foundation for growth by utilizing innovative ideas and IP. KIPO will continue to provide policy support so that innovative companies can more easily secure funds through IP finance by expanding the scale of IP funds through joint funds with the Financial Services Commission and other ministries, and by advancing the IP valuation system.”

This content was produced with the assistance of AI translation services.