Legal Frameworks for Intellectual Property-Based Secured Financing: Proposals for Reform in Vietnam

Abstract

Originating from the United States, intellectual property-based secured financing has spread into Asia over the last decade and gained increasing recognition by governments in this dynamic region as a potentially important financing model to improve access to credit for small and medium enterprises. Given that the world is moving towards a knowledge-based economy, intangible assets have become enormously valuable, and should be maximized in secured financing to enhance the availability of credit. Any country that does not timely respond to the ongoing trend and continues to rely on physical assets, particularly real property, will soon become obsolete and unable to secure sustainable economic growth. This has been observed in Vietnam, which was once the second-fastest growing economy in Asia after China. With thousands of businesses shut down and banks submerged in bad debts involving real estate mortgages, Vietnam has witnessed the slowest economic growth since 1999, which was substantially caused by the dearth of credit.

Although a broader range of personal property, including intellectual property (“IP”), has been recently used as collateral in Vietnam in recent years, the use of IP in secured financing raises many concerns that need to be addressed, including the shortcomings of the legal framework, which hinder businesses from leveraging their IP assets to gain access to credit. The Dissertation argues that to encourage IP-based financing in Vietnam, it is necessary to reform the legal framework and unlock the vast potential of IP.

The Dissertation examines different legal frameworks governing IP-based secured financing with focus on the framework of the United States – the pioneer in collateralizing IP assets. The Dissertation reveals that a modern secured transactions regime and a strong IP protection and enforcement system are the two prerequisites to establish IP-based secured financing. Based on primary research on Vietnam’s IP-based secured financing law and practice, and research on the experience of the United States, China, Southeast Asian countries, and the UNCITRAL Supplement on Security Rights in Intellectual Property in developing IP-based secured financing, the Dissertation presents comprehensive proposals to reform the legal framework for IP-based secured financing in Vietnam, such as revamping secured transactions law to facilitate secured financing, strengthening the IP protection and enforcement system to enhance the value of IP assets, developing IP-related services to shape an IP market, and training IP holders and financiers. The Dissertation also suggests proposals to reform education, foster IP creation and cultivate an IP culture.

Subject Area

Law

Degree Date

2014

Document Type

Dissertation

Degree Name

S.J.D.

Department

Dedman School of Law

Advisor

Xuan-Thao Nguyen

Second Advisor

Joseph J. Norton

Third Advisor

Danielle Conway

Number of Pages

xxii, 377

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