Intellectual Property Pledge Agreement

Intellectual Property Pledge Agreement: Use Your IP as Security

An intellectual property pledge agreement lets a business use its intellectual property, such as patents, trade marks, copyright, designs or software, as security for a loan or other obligation. If the borrower doesn't pay, the lender can enforce against the IP. Robot Lawyer drafts the agreement from your answers, using the form of security that fits the law of the country or state you choose. On the Verified plan, a legal professional checks it before you sign.

CONTENTS

What Is an IP Pledge Agreement?

For many start-ups and technology, media and brand businesses, intellectual property is the most valuable thing they own. An IP pledge agreement turns that value into security: the owner (the pledgor) keeps using its IP in the ordinary course of business, while the lender (the pledgee) gets rights over it until the debt is repaid.

"Pledge" is used loosely in this context. In many legal systems, a true pledge needs physical possession, which isn't possible for intangible rights, so the security is actually taken as a charge, a security assignment or a security interest. Your agreement uses the form recognised by the governing law, so it does what the parties intend.

When Do You Need One?

• Business loans
  A lender asks for security over the company's patents or brands before lending.
• Investor or bridge finance
  An investor wants security for a short-term loan ahead of a funding round.
• Venture debt
  Lenders to IP-rich companies often take security over the whole IP portfolio.
• Supplier or licensing credit
  A supplier or partner wants security for deferred payments.
• Group arrangements
  One group company gives security over its IP for a loan to another.

What's Included in Your Agreement?

• The parties and the secured debt
  The pledgor, the pledgee and the loan or other obligations being secured.
• The pledged IP
  A schedule listing the IP, with registration or application numbers where they exist.
• The security
  The form of security created and what it covers, including income such as royalties where you choose.
• Pledgor's obligations
  Keeping registrations renewed, defending the IP against infringers, not selling or licensing it beyond what is agreed, and keeping the pledgee informed.
• Warranties
  That the pledgor owns the IP and it isn't already subject to other security.
• Registration and perfection
  Steps to register the security at company and IP registries.
• Enforcement
  What counts as default and what the pledgee can then do with the IP.
• Release
  How the security is released once the debt is repaid.

Registering the Security

Security over IP is often only fully effective against third parties, such as a buyer of the IP or a liquidator, once it is registered. Depending on the country, that can mean registering at the companies registry, at the IP office where the patents or trade marks are registered, or on a personal property securities register. Deadlines can be short, so plan registration before you sign. Your agreement includes an obligation to complete the registrations the governing law requires.

How It Works on Robot Lawyer

1. Answer the questions
   Tell us about the parties, the loan or obligation, the IP and the pledgor's obligations.
2. Generate your agreement
   We draft a complete agreement with a schedule of pledged IP, under the law you choose.
3. Get it verified
   On the Verified plan, a qualified legal professional checks your agreement within 24 hours and makes amendments where needed. See how our documents are verified.
4. Sign and register it
   Sign the agreement, usually as a deed where required, and register the security in time.

How It Works in Different Countries

• UK
  Security over IP in England and Wales is usually a fixed charge or a mortgage by way of assignment. A charge granted by a UK company must be registered at Companies House within 21 days, and it is good practice to record it at the UK Intellectual Property Office too.
• United States
  Security interests in IP are generally governed by Article 9 of the Uniform Commercial Code and perfected by filing a financing statement. Recording at the US Patent and Trademark Office or the Copyright Office is also common, and for registered copyrights can be required.
• Ireland
  Charges granted by Irish companies are registered with the Companies Registration Office within 21 days, and can also be recorded at the Intellectual Property Office of Ireland.
• Canada and Australia
  Security interests are generally registered on the provincial personal property registries in Canada and the Personal Property Securities Register in Australia, with recording at the IP office where useful.

These notes are general. Check the current registration rules and deadlines for your security.

IP Pledge Agreement FAQs

Can I still use my IP after pledging it?

Usually, yes. The pledgor normally keeps using and licensing its IP in the ordinary course of business, subject to the restrictions in the agreement.

What happens if the loan isn't repaid?

After a default, the pledgee can enforce the security as the agreement and the governing law allow, for example by selling the IP or taking an assignment of it.

Which types of IP can be pledged?

Most can, including patents, trade marks, registered designs, copyright, software, domain names and the income from licences. Some rights, such as unregistered rights, can be harder to describe and enforce, so the schedule should be as detailed as possible.

Do I need a valuation of the IP?

It isn't a legal requirement, but lenders often want one to decide how much they are willing to lend against it.

Can I use this agreement outside the UK?

Yes. Your agreement is drafted under the law of the country or state you choose. Our lawyers are qualified in England and Wales and check documents for good practice, clear formatting and the law of England and Wales. They are not qualified in other countries' law, so if your agreement is governed by another country's law, we recommend having a local lawyer check it too.

Create an Intellectual Property Pledge Agreement

Use your IP to secure finance on clear terms. You can start with a 7-day free trial. See our pricing for the plans. Related documents: Patent Assignment Agreement, Trademark Assignment Agreement, Copyright Assignment Agreement and Trademark License Agreement.