IPOPHIL takes steps towards IP financing framework

The Intellectual Property Office of the Philippines (IPOPHIL) has taken initial steps towards enabling the monetisation of IP assets in the Philippines. On May 15 2015 IPOPHIL – the government agency in charge of protecting and advancing IP rights – held the High-Level Forum on IP Financing, in collaboration with KPMG. The forum was attended by representatives of government agencies and research institutes, such as Bangko Sentral ng Pilipinas, the Bureau of Internal Revenue, the Department of Finance, the Securities and Exchange Commission, the Department of Science and Technology, the National Economic and Development Authority, the University of the Philippines – Los Banos, the Filipinas Copyright Licensing Society and the Philippine Institute of Certified Public Accountants. The main purpose of the forum was to discuss formally the possibility of creating a framework for IP financing and valuation in the Philippines. This initiative of IPOPHIL recognises the growing trend for IP financing as an alternative source of credit, as well as the value of an effective IP financing framework for the country’s economy.

IP financing is a developing trend around the world. The objective of IP financing is to allow companies with low tangible assets to tap into their IP assets in order to access loan facilities or for banks to use patents, brands or copyright as collateral for business loans. Start-ups and small and medium-sized enterprises cannot afford to ignore this trend and miss out on the opportunity to use their IP assets as valuable sources of financing. The additional funding can spur innovation, improve R&D and affect overall economic growth.

Also discussed at the forum was the valuation of IP assets. The proper valuation of intellectual property, s an intangible asset, is challenging. Concerns were expressed as to whether a sound valuation can be achieved. The disclosure of IP assets for tax purposes by companies and reporting to the SEC in financial statements were also discussed. In addition, not all rights holders are aware of IP financing and understand the value of IP assets.

The Philippines has not yet developed its IP financing framework or policy. The recent forum marks the first steps towards the development of a legal framework and a national policy on IP financing. To help IPOPHIL further this initiative, there is likely to be a follow-up forum to discuss IP financing issues with the private sector (eg, banks and investors). Moreover, the creation of technical working groups comprised of different government agencies, as well as ongoing dialogues with interested agencies, will help to identify issues to be addressed by the framework. The forum and these future directives are intended to help local rights holders to attract foreign investors into the country.