Taking Security Over IP

Introduction

Increasingly, intellectual property represents a valuable part of the assets of a borrower group and therefore a valuable asset to be used as security for loans.

This briefing discusses the types of intellectual property rights that may be relevant to a business and the ways a lender can take – and subsequently enforce – its security over such rights. In doing so, the effects of including a negative pledge clause in a loan or security agreement where intellectual property is relevant will also be considered.

Types of Intellectual Property

The term Intellectual Property ("IP") covers a wide range of disparate rights and, at its most basic, is used to refer to intangible assets that are "creations of the mind". When considering taking security over IP, especially when (as in many cases) it could be the most valuable part of the security being obtained, it is necessary to consider the types of IP owned by the borrower group and how these fit within