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Abstract: 

Patent owners and financial institutions can monetize patent assets through securitization or collateralization (as collateral in secured financings). Such transactions offer considerable upside, especially in the current high-growth software, electronics, telecommunications, and biotechnology fields. On the downside, however, although patent securitization and collateralization transactions follow the general structure of securitization and secured financing not involving patent assets, the applicability of Article 9 of the Uniform Commercial Code to both types of transactions presents unique pitfalls that may prevent the creation of an effective security interest in patent collateral or infringement claims and royalties derived from the collateral. This article provides critical guidance to those embarking on such transactions.

Keywords:  patent-backed securitization; IP collateral; monetization of patents; UCC Article 9; security interests in patents

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