Research On Therisks Control Of Trademark Rights Securitization

Trademark securitization refers to a financing process, during whichthe originators transfer the cash flow which would be generated by thetrademark rights in the future and can be quantified, to a Special PurposeVehicle. This vehicle would conversion the underlying trademark rightsassets which have poor liquidity into securities which can be circulatedfreely in the market, with a reasonable risk isolation mechanism and abenefit distribution mechanism.On the base of introducing the theory and practice development ofthe trademark securitization both in the homeland and worldwide, thisarticle would analyze the potential risks that may exist in all aspects oftrademark securitization process, and give some advices of risks controlfor the emerging trademark securitization business from a legalperspective. The article is divided into four chapters. In the first chapter,firstly, the writer tried to define the trademark securitization after thereference and analysis of the definition of asset securitization andintellectual property securitization. And then the author demonstratedthe necessity and feasibility of the trademark securitization in order toanticipate the prospects for the development of trademark securitization.In the second chapter, the author introduced three famous cases of thetrademark securitization in the United States, then presented the detailedprovisions of the promoters and the underlying assets in intellectualproperty securitization process in the Swiss, and finally recommend thedevelopment model of Japanese intellectual property securitization, theseexperiences display great enlightenment for our trademark securitization:the mature securities markets and trust systems, excellent underlying assets, the operation mode of risk diversification and cost reduction,professional services, excellent infrastructure assets, the government’spositive policy and cautious attitude about trademark securitization, asound legal system. In the third chapter, after introducing transactionpatterns of trademark securitization, the author analyses the potential risksof trademark securitization from the underlying asset, the originators andthe Special Purpose Vehicles, including the lack of clear provisions aboutthe underlying assets, the nature and effect of "true sale" to be discussed,the value of the underlying asset volatile and difficult to determine, therepeated license nature of trademark and the lack of notification system oftrademark licensing, derogatory value risk of the trademarks because oforiginators’ bankruptcy, the revoked risk of "true sale", the independencerisk, bankruptcy risk, the establishment obstacles of the Special PurposeVehicles. Finally, the fourth chapter puts forward some risk controlmeasures, including a clear scope of the rights of the underlying assets,increasing the provisions of the future debt rights transfer, consummatingnotification systems of the debt rights transfer and trademark use, clearingthe standards of “true sale”, defining the setting up forms and organizationforms of the Special Purpose Vehicles, well-designed trust contracts and soon.