Without being able to offer suitable security, a business may find it difficult to borrow, or at least the terms of secured borrowing will be more favourable than those of unsecured borrowing. Intellectual property rights, including patents and patent applications, are assets that potentially can be used as security for loans or other credit. Indeed, for some research based businesses, the patent portfolio may be their most valuable asset.
This Guidance Note discusses the methods of taking security over patents, and the formalities required. In the Note, the person who creates the security is referred to as “the chargor” and the person who takes the benefit of the security – who could be a lender or even a supplier trading on credit terms – is referred to as “the chargee”.
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