11/21/2008
Banks sell patents to recover losses at foreclosed companies
Patents portfolios have gained new recognition as a way for financial institutions to recoup some of their losses from foreclosed companies.
Although there are one-off examples where banks were able to monetize patents, it's a relatively new area.
Keith Agisim, associate general council for intellectual property at Bank of America Corp., helps form and implement the bank's intellectual strategy. One of his jobs is to sort through patent assets of companies the bank has foreclosed on.
"We view it as a way obviously to help recover on the loans, but also as a way to get technology back in the hands of operating companies so that they can continue to build and innovate to introduce new products into the economy," Agisim said.
Typically, a company's assets serve as the backstop to business loans. When foreclosures happen, banks look to recoup losses by liquidating inventory, capital equipment and real estate.
Historically, banks lending to technology companies have taken intellectual property as collateral because in many cases, with startups especially, patent portfolios might be the company's only salable asset.
"During great times it's a non-issue because companies are able to repay their loans," said John Hale, a Palo Alto-based partner in Cooley Godward Kronish LLP's credit finance practice.
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Reprinted with permission from the San Jose Business Journal. ©2008, all rights reserved.