Although the mortgage of intellectual property assets is currently completed, according to numerous commercial bank executives, credit institutions are encountering numerous operational obstacles

Many experts believe that the legal framework must soon be completed in order to assist enterprises in using intellectual property to obtain bank loans.

Lack of legal regulations

Products produced by the human mind through creative and intellectual endeavors in a variety of social domains are known as intellectual property. This kind of intangible asset is very valuable because of its potential to make money, even if it isn't defined by its physical attributes.

The use of property rights resulting from intellectual property rights to guarantee the performance of duties is permitted by current legislation. In particular, Article 115 of the Civil Code 2015 states that "Property rights are rights valued in money, including property rights over intellectual property objects, land use rights, and other property rights." This clause went into effect on January 1, 2017.

The 2015 Civil Code's Article 317 states: "Mortgaging property is when one party (hereinafter referred to as the mortgagor) uses their owned property to secure the performance of an obligation and does not transfer the property to the other party (hereinafter referred to as the mortgagee)."

Article 17 of Decree 21/2021/ND-CP that governs the Civil Code further states: "The owner of property rights arising from intellectual property rights, information technology, scientific, and technological activities can use property rights for subjects of copyright, related rights, industrial property rights, plant variety rights, property rights, rights to use the results of scientific research, technology development, technology transfer, and other rights valued in money arising from intellectual property rights, information technology, scientific, and technological activities to secure the performance of obligations."

Additionally, Article 11 of the Government's May 15, 2018, Decree 76/2018/ND-CP, which offers comprehensive procedures for carrying out specific elements of the Technology Transfer Law, acknowledges the use of intellectual property as collateral.

These regulations give companies full authority to use intellectual property as collateral to guarantee the payment of debts, including bank loan mortgages. Nonetheless, the regulations continue to only offer broad recommendations about asset mortgaging. However, there are currently no comprehensive rules on mortgaging intellectual property assets in the specialized laws on intellectual property.

Many barriers

The acceptance of collateral for intellectual property is currently very limited because of its intangible nature, the difficulty of valuing it, or the substantial decline in value brought on by the ongoing advancements in science, technology, and digital transformation, according to Mrs. Hoang Thi Ngoc Phuong, Director of the Hanoi Transaction Registration and Asset Center.

Although the mortgage of intellectual property assets is currently completed, according to numerous commercial bank executives, credit institutions are encountering numerous operational obstacles, including three primary ones.

First, there is still work to be done on the legal framework for mortgaging intellectual property assets. As a result, the laws governing the mortgage of intellectual property are currently unclear. In particular, there are currently insufficient legal requirements to address disagreements that may arise throughout the intellectual property mortgage process.

Second, because the value of intellectual property is typically fluctuating, its valuation frequently presents numerous difficulties.

Third, because intellectual property assets are intangible and subject to numerous hazards and conflicts over intellectual property rights, managing them through bank mortgages is extremely challenging and time-consuming. Furthermore, the worth of intellectual property is frequently erratic and fluctuates over time.

Due to these obstacles, financial institutions won't be able to be more bold in taking intellectual property as collateral to grant credit to companies until the legal framework for intellectual property mortgages is finalized and Vietnam creates a market for intellectual property trading.

The current laws must also clearly regulate issues like: intellectual property can be mortgaged with conditions; intellectual property mortgages must be registered; information must be kept confidential during the mortgage process; measures must be taken to protect the mortgagee; and how to handle mortgaged intellectual property after the mortgagor fails to fulfill their obligations in order to reduce the risks associated with the process of mortgaging intellectual property.