Minutes - TRIPS Council - View details of the intervention/statement

H.E. Ambassador Dr Lansana GBERIE

453.   My delegation has the honour to briefly introduce, on behalf of the group of the 'Friends of IP and Innovation (FOII)', the communication contained in document IP/C/W/692, titled "Intellectual property and innovation – Role of IP to raise finance for start-ups". The submission is co-sponsored by the delegations of Australia, Canada, Chile, the European Union, Japan, Singapore, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, the United Kingdom and the United States of America. 454.   During the Council's lunch break yesterday, the Friends of IP and Innovation organized an event with panellist from WIPO, from WTO delegations and the private sector. It that focused on IP and finance, with a focus on start-ups and MSMEs many questions were posed, and we had a lively debate. 455.   For start-ups it is a particular challenge to raise enough capital to be able to grow and to reach their full potential. IP financing can help in this challenge. In our submission, the following six types of IP financing are being examined more closely: 1. IP-based equity financing - when partners invest their own money in the company. 2. IP-backed venture debt - a newer form of financing for young firms in which IP serves as collateral. 3. Revenue from IP licenses - the classic method of generating cash flow from IP rights such as patents, trademarks or designs. The purchase of a license allows the buyer to use the company's IP. 4. Royalty securitisation - in which the IP owner sells an income stream associated with the IP for a specified period of time in exchange for an upfront payment. An example from the area of copyright are artists selling rights to future income from their songs or photographs. 5. IP sale-leaseback - here, IPRs are sold by the right holder to an investor and then leased back from it. For start-ups, this type of IP financing has the advantage of providing immediate liquidity. 6. Finally - IP insurance - in which a third party provides upfront capital to the IP owner to fund potential IP infringement disputes. 456.   I will now introduce our own country experience with regard to the use of these types of IP financing. Switzerland has fared well over the past years in WIPO's Global Innovation Index when it comes to its innovation environment and performance. This said, WIPO's report points us to areas where we can further improve. For example, in the category of "Venture capital received". On this background, Switzerland recently conducted a country study on IP financing19, in partnership with WIPO. The study brought several insights to light: in order to convince investors, such as business angels or venture capitalists, start-ups should present a compelling business case. 457.   A promising IP portfolio can be one way of doing this or at least an important part of such a strategy. In Switzerland, IP financing is focused on Venture Capital funding. Especially patents are frequently used to signal that there is qualitative substance in a young company. This is particularly so in the life science sector, but also for clean-tech and ICT start-ups. By contrast, IP is rarely used as collateral in classical debt finance in Switzerland, although the Venture Debt market has grown in significance more recently. Even more of a niche in Switzerland's innovation environment are the financing methods of IP insurance and IP sale-leasebacks. 458.   Let me now present a real-life example of how patents can help in the financing process: The Swiss start-up Oxara20 has developed a cement-free admixture-technology that converts waste into cement-free concrete and non-fired bricks. Compared to conventional concrete, the production of so-called "Cleancrete" or "Cleanbrick" (both are registered trademarks of Oxara) leads to significantly lower CO2 emissions. For the future, Oxara plans to expand its portfolio with new products and patents. Oxara has won several grants and awards for its patented technologies. According to Oxara, its patent portfolio and IP strategy has been key to attract financing from investors, enabling Oxara to take off fast, hopefully into a promising future. 459.   In order to encourage the use of IP for financing purposes, it can be helpful to support startups and MSMEs in establishing an IP strategy. One such support in Switzerland is through coaching programs in which start-ups receive expert advice, for example, in relation to setting up their own IP management. The Innosuisse Start-Up Coaching program21 offers packages for high-tech startups where they get advice from fellow entrepreneurs and coaches that are experts in relevant business areas like finance, commercial law and, not least, of course, IP. 460.   Before concluding, I would like to draw delegations' attention to a high-level conversation organized by WIPO entitled "Unlocking Intangible Asset Finance". This conversation will take place in three weeks' time, on 1 of November. The event will highlight the potential of intangible assets for financing to a wider audience from both the public and private sector. 461.   As for today, my delegation is looking forward to a fruitful exchange among Members. We encourage others to share experiences they have made with IP financing, challenges encountered, lessons they have learned and to pose questions they may have.

The Council took note of the statements made.
84. The Chair said this item had been put on the agenda at the request of the delegations of Australia, Canada, Chile, the European Union, Japan, Singapore, Switzerland, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, the United Kingdom, and the United States of America. These delegations had also submitted a communication on this topic, circulated in document in order to allow Members to prepare for today's discussion.
85. The representatives of Switzerland; Japan; the United States of America; Australia; Canada; Chinese Taipei; Singapore; the European Union; the United Kingdom; Chile; Hong Kong, China; Uruguay; Mexico; Switzerland; South Africa; India; China; and Indonesia took the floor.
86. The Council took note of the statements made.
IP/C/M/106, IP/C/M/106/Add.1

19 See WIPO and IPI (2022 – to be published).

20 https://oxara.ch/technology/

21 https://www.innosuisse.ch/inno/en/home/support-for-start-ups/startup-coaching.html