Corporate Finance Patent Pledge Legal Issues

Nowadays in China, on the one hand, the overall utilization efficiency of the patent system is still very low; on the other hand, there are still very huge bottleneck problems for enterprises financing. How to maximize the leverage role of patent and make patent pledge one of the best ways to realize patent values is a key issue to solve serious financing problems. Prof. David Chen, as a famous scholar, has been focusing on the theory research on patent pledge. He hopes that the author can write this academic paper on this. The author thinks that patent is not only "The Umbrella" to protect enterprises'technology and "The Tool" to stop others'infringement, but also the best way to finance. Let patent pledge "add the fuel of interest to the fire of the Chinese enterprises financing." (Referring to Abraham Lincoln's words)The first chapter introduces the current situation of Chines enterprises financing through patent pledge, emphatically analyzing the status of Shanghai, Beijing, Tianjin, Guangzhou and Xiangtan. From experiences of the City of Xiangtan, Shanghai should draw a conclusion that governmental effort on the establishment of "Soft Environment" is the core aspect to improve patent pledge. After that, the author explains the reason of writing on such a topic, analyzes and summorizes the writings of the earlier theoretical results and then concludes the innovation points of this article.The second chapter, the main body of this article, deeply discusses the current legal issues on patent pledge financing. In the fist quarter, the legal problems on financing subject are discussed, including the pledgor qualification and the pledgee's selection. The second quarter focuses on the object problems. The author supports the opinion of allowing "The Pledge of Patent Application Right" and "The Patent Re-pledge' because that they fit well with the legal conditions of patent pledge:property right attribute, transferable attribute and statutory rights attribute.The third chapter mainly talks about the nature of patent guarantee. What should we call it:patent pledge or patent mortgage? The author thinks patent mortage better. This is not only a question of how to address it, but also a key aspect of the Chinese legislative's attitude regarding how to develop China's patent guarentee business and whether or not we should accept "The Pledge of Patent Application Right" and "The Patent Re-pledge "The fourth chapter briefly introduces other countries'legislation and current situation on intellectual property pledge financing. The author pays attention to the reason why Japan has developed its intellectual property pledge financing much faster after the Financial Crisis in Asia. The author thinks that compared with tangible assets, such as real estates, intangible assets, such as patent assets, are not easy to be striken by the financial crisis. Accordingly, Chinese enterprises and commercial banks should take advantage of the current situation and promote patent pledge business vigorously.The fifth chapter gives an idea of how to perfect patent value assessment and of how Shanghai may develop patent pledge better. This chapter begins with the current situation of the Patent Value Assessment, briefly discusses the basic ways of evaluatiing patent values. Finally, this chapter takes Beijing Branch, China Communication Bank's way as an example, giving reasonable suggestions to Shanghai. Risk control is one key issue for Shanghai patent pledge work. Shanghai should pay attention to the following aspects:formulate qualifications on pledged patent, the introduction of asset appraisal companies and law firms, introducing professional guarantee companies, introducing intellectual property transaction platform and clarifying the basic conditions of credit.Finally, the author gives a brief conclusion to end this article.