Leveraging intellectual property in the financing of entrepreneurial ventures: a technology-based solution to the perfection of security interests

The commercialisation of innovation is a significant stimulus to economic growth, especially in the entrepreneurial sector of the economy. The supply of funds to bring to market a technically and commercially viable innovation requires an assurance to funding sources that their financial interest in the innovation is secure. This confirmation of a security interest requires both adequate legal protection of intellectual property and patents on which the innovation relies and a rapid and cost-effective search for liens on that intellectual property. The current system (or lack thereof) of lien registration differs from state to state, from manual systems to remotely searchable computer databases. It is expensive and time-consuming to mount a full 50-state search. The recommendation in this paper is that there be a state-managed input of data into a state database that is linked nationally to other state databases, all using compatible technology and protocols. To implement this recommendation, states will need to make an investment in mutually compatible electronically searchable databases. The payoff is a more timely, effective and efficient method of funding innovation based on intellectual property-based innovation, thus stimulating economic growth and job creation. While the paper has the USA as its focus, the recommendations may be extended internationally. The paper argues for the need to increase the availability of, and access to, reliable information about liens on intellectual property assets in the 50 states.