Intellectual property as loan collateral pushed

MANILA, Philippines - Companies should start securing patents for their trademarks, products, manufacturing processes, and designs because these intangibles are assets which can later on be used as collateral for bank loans, intellectual property authorities Wednesday said. The trend is gaining acceptance worldwide, the Intellectual Property Office of the Philippines (IP Philippines) said, and once allowed in the country, even small- and medium-sized firms can benefit. The government is working with different agencies including the state-owned Development Bank of the Philippines (DBP) to create a scheme that will allow firms to secure loans by pledging their intellectual property, said Eugeniano E. Perez III, National IP Policy Strategy director, at the sidelines of a forum on protecting IP rights. Government banks in Thailand already process loan applications with IP assets as collateral. Banks first verify with the IP office that such an asset is registered. They then assign a value to the asset and lend a corresponding amount, guidelines from the Thai intellectual property department website state. The Philippines also allows the practice although banks still prefer tangible assets like real estate as collateral for loans. The General Banking Act of 2000 states that "loans and other credit accommodations on security of chattels and intangible properties such as, but not limited to, patents, trademarks, trade names, and copyrights shall not exceed seventy-five percent (75%) of the appraised value of the security." DBP President Reynaldo G. David said his bank had extended loans to promising inventors before. "It depends on the project or copyright. What we do is we study the project," he told BusinessWorld. IP Philippines Director-General Adrian J. Cristobal, Jr. cited the example of how Coca-Cola borrowed money in the US against its popular trademark, which had previously been valued at more than $70 billion. "But the size of the company does not matter. It (IP protection) is relevant for a giant company like Microsoft but also for the 25 small- and medium-sized [software] companies growing [locally]," Mr. Cristobal told the forum. "Trademarks going around is advertising going around. It brings value to your company ... [it’s] a sign of quality," Mr. Cristobal added. Officials are trying to shore up the number of Filipino inventions, designs and trademarks being patented, which have declined tremendously. In 2006, patent applications totaled 4,766 — a minimal improvement from a decade earlier when applications hit 4,238, IP Philippines data show. Of the 2006 applications, only 3% came from Filipinos. But before the government talks about exploiting intellectual property, it must first make sure trademark owners are protected against copycats. The government must speed up the processing of cases involving IP rights violations, Christopher L. Lim of the Quisumbing Torres law office said during the forum. "We get support from law enforcement agencies but it bogs down after the raid. Try putting one (an IP rights violator) in jail," Mr. Lim said. "If you don’t get adequate protection, investors will be hesitant ... Highly technical industries will think twice before they invest here," Mr. Lim warned. Mr. Cristobal, for his part, said that the Supreme Court had empowered IP Philippines to review the procedures for hearing an IP case in preparation for the impending revival of special IP trial courts. MANILA, Philippines -