Intellectual Property Licensing Receivables Transferring And Intellectual Property Securitization

The World Intellectual Property Organization (WIPO), among others, describes the securitisation of intellectual property (IP) assets as "a new trend". In the case of intellectual property rights, the receivables may be license royalties or other predictable cash flows from the intellectual property. The owner of the receivables, who is called the originator, groups receivables together and transfers them to a special-purpose vehicle (SPV) that is formed for the sole purpose of acting as an issuer of the securities based on the receivables. The SPV issues debt or equity to investors and uses the proceeds to pay the originator.No matter what form of security is issued by the SPV, the SPV is created in an effort to make the securitized asset remote from the assets of the originator so that in the event of the originator's bankruptcy, the court will not include the asset as part of the originator's estate. The bankruptcy court will look at the originator's transaction with the SPV to determine whether it is, in fact, a true sale and not just a mere loan.The determination of true sale of credit rights of IP licensing receivables play a vital part in the whole securitization transaction. The true sale is one of the outputs of credit-right assignment; the other outputs including secured loan, trust and bestowal; so whether the credit-right assignment is regarded as true sale rather than secured transaction is very complicated and the clarification and characterization by any party of the transaction is not enough at all and is subject to the re-characterization by the court.This thesis proposed several elements, principles and approaches that should be considered or adopted by court in the case of re-characterization after comparative study on the legal theory and practices and legislation history in USA..