ABSTRACT
Innovation has become synonymous with survival strategies and success of any enterprise in today's marketplace. Legal protection provided through intellectual property rights to inventions and innovations offers such enterprises the legal monopoly over their exclusive commercial use and forms the backbone for the revenue generation, especially for knowledge-based organizations. Such intellectual property rights (IPR) are also recognized as assets on the balance sheets of enterprises as per “International Accounting Standards (IAS) – 38: Intangible Assets”. In today's economy these intellectual property rights/assets have become a major contributor to the market capitalization of different companies. Intellectual property rights are of different forms, viz. patents, trademarks, copyrights, industrial designs, and geographical indications, and have their own distinctive characteristics and implications. Among these various types of protection, patents, being the most robust form of protection and probably the best tradable among intangible assets, have been focused in the present research. IPR are exploited to earn revenue through different means like licensing, outright sales and purchases, internal use for manufacturing products by the owner, as well as for merger and acquisition purposes. In addition to these different means of generating revenue, these rights can also be exploited for securing necessary funds through various ways such as equity finance and debt finance. IPR, specifically patents, offer two broad means for leveraging debts: bank collateral and securitization. Securitization is the process of raising funds from investors in the capital market by issuing debt securities. The funds to be raised would be backed by assets or a pool of assets having a potential for generating cash flows. The process involves the transferring of the revenue-generating asset to a separate legal entity known as Special-Purpose Vehicle (SPV), which in turn raises funds by issuing debt securities in the capital market. The funds so raised are used for making payment to the owners to compensate for the asset transferred. The SPV makes due payment to the investors.
