Using intellectual property as collateral is not novel. Thomas Edison used his patent of the incandescent electric light bulb for financing to create General Electric in the late 1900. Another example was that of Mrs. Waterman who borrowed, in 1884, $6,500 from Asa L. Shipman & Son and gave the fountain pen patent as collateral for the loan (Waterman v. Mackenzie, 138 U.S. 252 1891).
Intellectual property has since been used as collateral in many transactions. The stats gathered by Relecura, Inc. (a California-based patent research and analysis company) are pretty telling.
In the top financing entities giving IP-backed loans between 2011 and 2016, we find Bank of America with the largest market share (16.87%); JPMorgan and Morgan Stanley follow with 12.72% and 6.80% of the market-share, respectively: Relecura.
Relecura also reports some of the world’s biggest IP-backed financing transactions… see Relecura. It is fascinating to note that one the biggest patent-based lending transactions took place in China in 2014. Chinese company Qualin Paper used its portfolio of 110 patents and 34 trademarks to secure a 1.3 billion U.S. dollar loan from a consortium lead by China Development Bank.
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