“Do you think IPwe will facilitate the use of intellectual properties as collateral for financial institutions?” I was recently asked this question.
In fact, the Japanese government has been promoting IP-based lending for several years. The government bears the cost of IP evaluation for financial institutions. However, at prsent, financial institutions don’t seem to regard the evaluation report as an important document for making actual financing decisions (*1).
The challenges for financial institutions in using IP as collateral are generally as follows:
- It is difficult to assess the collateral value of patents. In particular, it is questionable whether the assessed value is consistent with the actual market rate.
- There is a risk that the patent may be declared invalid.
- It is not certain that the patents can actually be cashed in the market at their assessed value.
IPwe uses AI technology to assess patents, taking into account previous transactions of similar patented technologies, and also provides information on whether a patent is likely to be commercialized. IPwe also provides an assessment of the likelihood that the patent will be invalidated. Then, if the lender is unable to repay the loan, the financial institution can sell the patent through the IPwe platform in order to recover its funds. In this way, IPwe seeks to solve traditional challenges.
So my answer to the above question is “yes”.
That said, at this point in time, the patent market is still very special to many companies and financial institutions. There are not yet many participants in the market, both buyers and sellers. So, it may take time.
I expect IPwe to create an environment in which more companies can easily utilize patents.