Patent and Trademark Pledge Financing in China Gains the Largest Increase in the 13th Five-Year Plan Period
Updated: 3 09,2021

In 2020, the total confirmed amount of patent and trademark pledge financing reached 218 billion, showing a year-over-year growth of 43.9%. The number of pledge projects was 12,093, showing a year-over-year growth of 43.8%. Both figures indicate that, last year, patent and trademark pledge financing gained the largest increase during the 13th Five-Year Plan period.

Many micro and small enterprises face sluggish development, which is a common difficulty caused by liquidity pressure despite their possession of IP rights such as patents and trademarks. IP pledge financing allows enterprises to attract financing support through intellectual property pledge, broadening their financing options and creating new opportunities for their development. Last year in particular, when Covid-19 struck, the China National Intellectual Property Association (CNIPA) and intellectual property bureaus at all levels had resolutely implemented the plan of the central government. This plan was to coordinate the epidemic prevention and control with economic and social development, ensuring the "six priorities" and stability in six areas by carrying out a series of measures to promote the innovation and service improvement in financing services such as IP pledge financing, facilitating the high-quality development of the economy.

Green channel for fast-track financing

"We pledged our two invention patents for IP pledge financing. The registration was completed a day after we handed in the relevant materials to the intellectual property association in Bengbu. We received the IP pledge financing loan of 10 million yuan from the bank shortly after." said Ma Lei, head of the financial department of Bengbu Tiancheng Packaging Technology Co., Ltd.. The company had resumed work in early 2020 while many others in the same industry remained unable to operate on schedule. The number of orders it received saw a significant increase compared to previous years, showing that IP pledge financing can provide the financial support needed for enterprises to increase their production.

After the occurrence of the epidemic, liquidity became especially important for the resumption of work and production. In a timely fashion, CNIPA promulgated the Ten Measures to Support the Resumption of Work and Production jointly with the State Administration for Market Regulation and National Medical Products Administration, issued the Notice regarding Promoting the Application of Intellectual Property Rights and Supporting the Battle of Epidemic Prevention and Control, and drew up over 70 documents on business continuity policies. Multiple regions distributed the policies through printed documents or QR codes, undertaking the function of IP financing in helping enterprises to address difficulties.

CNIPA created a green channel for the registration of patent and trademark pledges and have since provided fast-track services for over 5000 enterprises. To sharply increase the efficiency of the registration process, CNIPA revised its provisions of the pledge of trademarks, adopted the notification-commitment system, and simplified registration materials and procedure, reducing the time frame to only two working days. As for patent pledges, the time frame for processing of paper documents has been reduced from seven working days to three working days, and to one working day for digital processing.

According to statistics, among the pledgers of patent pledge financing in 2020, industrial enterprises pledged 97.9% of the total number of pledged patents, reaching the largest percentage in the 13th Five-Year Plan period. This proves that pledge financing has played an important role in the support of IP transformation and the development of the economy.

Matchmaking seminars for the promotion of best practices

"In 2019, we intended to undertake an environmental protection project, but the cash flow was tight. Just then, the Hunan Intellectual Property Bureau helped us conduct a matchmaking with the bank. In a little over one month, the company received a pledge loan of 10 million yuan." said Chen Minzhi, Deputy General Manager of Changsha Hasky Environmental Protection Science & Technology Development Co.,Ltd. At the main event of the Hunan Stop of the Intellectual Property "Benefiting Enterprises in the Industrial Park" held in November 2020. She showed the enterprises present at the event how IP pledge financing can help with their development.

The event was part of a series held from November to December 2020 by CNIPA and China Banking and Insurance Regulatory Commission (CBIRC). The series event was successively held at 53 industrial parks in Beijing, Zhejiang Province, Hunan Province, Guangdong Province and Chongqing Province, receiving positive response from the enterprises and industrial parks in the regions. Over 220 banking financial institutions and over 1400 enterprises attended the events. Through the introduction of policies, exchange of information and participation in the matchmaking between banks and enterprises, the participants had signed contracts valuing a total of 710 million yuan.

The matchmaking seminars allowed more enterprises to learn about the funding channel of pledge financing and served as a bridge connecting enterprises and banks. Apart from the series event of IP Pledge Financing "Benefiting Enterprises in the Industrial Park", CNIPA and CBIRC began a case selection of IP financing pledge and insurance. The intellectual property bureaus, banks and insurance companies across the country recommended a total of 224 cases, bringing to light their commendable experience in IP pledge financing.

According to statistics, in 2020, the amount of patent pledge financing in China was 155.8 billion yuan. Banks and banking financial institutions such as credit unions were the largest pledgers, covering 67.4% of the pledge projects.

Innovative financing for more channels

The rapid development of IP pledge financing could not be achieved without the support provided by IP securitization and insurance.

In 2020, CNIPA guided local intellectual property bureaus in the exploration of IP securitization. Shenzhen, as a result, successfully released a number of IP securitization products which constructed underlying assets through IP pledge. In the meantime, CNIPA instructed insurance companies to introduce new insurance products such as the loss insurance for collective trademark and geographical indication infringement, as well as the professional indemnity insurance for the support and guidance of IP asset appraisal in Wuxi, Jiangsu Province, providing more comprehensive protection for IP pledge financing. CNIPA also carried out strategic cooperation with China Construction Bank and developed exclusive products such as the Yunzhi Loan.

In 2020, IP pledge and the relevant modes of insurance were included in the measures supporting innovation and reform determined by the State Council three times.

Next, the national IP rights system will further study and implement the spirit of General Secretary Xi Jinping's important speech at the 25th collective study of the Political Bureau of the the Central Committee, carry out the arrangements made by the Central Committee and the State Council regarding the utilization of intellectual property, and promote IP financing such as IP pledge financing. The goal is to accumulate more momentum for high-quality economic development through new technologies and services by solving the difficulties in IP pledge financing and focusing on high-tech zones and innovative enterprises in accordance with the requests made in the Meeting of Directors of CNIPA.(Translated from CNIPA Website Chinese Version)