Trading Innovation : An Analysis of Innovations in Intellectual Property Monetisation

The recognition of property rights in intangible intellectual creations and the protection of these rights through the mechanisms of copyright, patents, trademarks, industrial designs, and related rights has led to the acceptance of Intellectual property rights as highly valuable business assets. Intellectual property refers to the bundle of legal and equitable rights that accrue to a person who engages in a creative or innovative activity, fixes his creation in a definite medium and protects his rights through the legal mechanisms of copyright, trademarks, patents, industrial designs or allied rights. Initiatives are being undertaken in several jurisdictions to facilitate cost-effective monetisation of IP rights, but these transactions may only be accomplished in the presence of an enabling financial and regulatory ecosystem encompassing intellectual property, bankruptcy, tax, and securities law considerations. This study analysed relevant legislation to determine whether the current commercial law regime facilitates or impedes the issuance of IP-backed instruments. This study aims at distilling the factors required to improve IP liquidity and develop a sustainable market for liquid securities backed by intellectual property rights in order to facilitate the efficient monetization of IP portfolios. This study is premised upon the view that an IP right may only be effectively monetised in an enabling legal and regulatory ecosystem. This would require strong domestic IP protection and enforcement legislation, supplemented by international cooperation and treaties which prevent the infringement of the originator's IP rights across jurisdictional lines, recognition of divisibility of IP rights in order to issue non-exclusive licensing rights contracts, a judiciary educated in the intricacies of IP rights and related transactions. It is recommended that exchanges be developed for the purpose of facilitating, regulating or controlling the process of buying, selling or dealing in IP securities or assets on a regular basis. A corollary to the need to develop IP exchanges is the need to regulate market participants' activities to prevent market abuse such as price manipulation, conflicts of interest and excessive speculation. The current legal framework utilised for the transfer of IP is created for the transfer of tangible property, and with innovations in the financial market outpacing changes in the legal framework, there is an urgent need for legislation specifically tailored to the enhancement of IP liquidity and the regulation of IP instrument trading