With new insights regarding prudential financial regulation, this chapter contributes to the interdisciplinary literature to support sustainable innovation finance and Sustainable Development Goal 9 in a market-based context. Yet to receive significant attention in the academic literature are the banking capital adequacy ratio (CAR) requirements and their impact on intangibles such as intellectual property rights (IPRs). The Basel Committee on Banking Supervision and the Basel Accords bank asset classification system are examined in the context IPRs which fall within the ‘intangibles’ asset class, nonphysical assets with potential benefit in the long term. Through an analysis of the Basel Accords I-IV and statements on monetary policy published in speeches of high-level central bank professionals, we make an exploratory case to ‘carve out’ registered granted IPRs from the wider ‘intangibles’ asset class for prudential regulation purposes. The original analysis contemplates designing a sustainable innovation finance system to better support inventors, patent owners and SME operating companies beyond the venture capital milestone.
When insolvency strikes the knowledge economy, the corporate collapse may cause even wider financial and social harm than is typically the case, given the negative impact on commercialising innovation, an important societal goal in modern economies. This chapter examines the new relationship generated between modern intellectual property (IP)-centric technology firms and insolvency during corporate restructuring events in advance of, and to stave off, corporate insolvency. Intangibles, an accounting term, a subset of which includes IP rights are a wide-ranging asset class requiring specialist valuation and legal expertise to identify, capture and maintain economic value for distressed firms. In this chapter we focus on how to deal with corporate patent assets (the foremost IP right) when the business is viable but needs to restructure and/or sell the assets and containment of the impact of the insolvency. A discussion of recent developments illustrates the need for a more holistic approach to IP valuation, beyond the quantitative financial value. In this regard, a case study involving the demise of American unicorn firm Theranos, Inc. maps the issues that can arise and recommended responses such as the use of technology readiness levels (TRLs) and human capital evaluation to support a more accurate distress value of patent portfolios. We then consider the role of IP governance and potential predatory behaviour on the part of company insiders, competitors and other predators who may covet the future value creating potential of the company’s patent assets. To this end a deeper understanding of the complex new relationship between distressed companies, their corporate patent assets and the responsibilities of insolvency practitioners is developed.
The activities, actions and ethics of UK corporate technology and intellectual property (IP) owners are increasingly subject to public scrutiny. This chapter examines the role of corporate governance in relation to technology, and IP rights owned by large and premium listed companies. The analysis is interdisciplinary and examines how the UK’s corporate law framework is beginning to give visibility and transparency to potentially valuable corporate IP assets, the technological innovations and brands they protect. For the first time, the UK Financial Reporting Council’s revised ‘Guidance on Board Effectiveness’, which supplements the 2018 Corporate Governance Code, expressly refers to ‘intellectual property’. The Guidance recommends that company boards of directors ask themselves questions on these important company assets when making decisions. The chapter examines the legal requirement for company directors to possess appropriate ‘ability’ to exercise independent judgment in matters relating to the company’s technology and IP. Directors’ reliance on the ‘business judgment rule’, a legal doctrine used as a shield against accountability, is critically analysed in the context of technology and IP rights. The chapter then evaluates board composition and the use of advisory technology and IP boards established to advise the main board of directors, as well as the role of the Chief IP Officer (CIPO). Finally, the chapter hypothesizes that a company with an IP-conscious ethos will enhance public trust in technology and IP rights by providing a pragmatic route to shaping its corporate culture, ethics and social responsibility (CSR).
This chapter reflects on how the historical development of the company law framework could be instructive for the recalibration of the accountability of corporate intellectual property rights (IPRs) owners within UK company law. In England in the 15th century, letters patents were awarded to individuals. Ownership by legal persons (corporate bodies) was never contemplated. The concept of a ‘company’ with a separate legal identity and limited liability did not even exist until centuries later with the enactment of the British Joint Stock Companies Act 1844, regarded as the first modern piece of company law. The interdisciplinary analysis in this chapter will focus on an important aspect of company law development, namely, the history and rationale for the company classification system (e.g. small, medium, large, private and public etc.) for regulatory purposes. Lessons learned from corporate law reform in terms of company classification by size, type and corporate group structures are studied to inform a new company classification taxonomy to apply to privileges IPR ownership in a corporate law context.