IPAN Director Associate Professor Janice Denoncourt’s Chapter ‘IP, intangibles and banking capital adequacy ratios’ is part of an important new publication in the field of sustainability – “Intellectual Property and Sustainable Markets“, Edward Elgar Publishing, July 2021.

The publication will be of value to students and scholars of IP and environmental law, as well as policymakers, practitioners and NGOs concerned with corporate social and environmental responsibility.

Intellectual Property and Sustainable Markets

The research in this volume studies the role intellectual property (IP) rights play in tackling the challenge of securing sustainable development.  Scholars consider how the core objective of IP rights, to promote innovation and develop new knowledge, aligns with the UN Sustainable Development Goals (SDGs).  Chapters analyse selected interrelations between IP law and other areas of law, including energy and financial law.

Associate Professor Denoncourt’s chapter provides new insights on a topic that has received scant attention in the academic literature, namely banking capital adequacy ratio (CAR) requirements and their impact on intangible and innovation finance.    She builds an exploratory case that analyses treating registered IP rights such as granted patents more favourably from a banking capital adequacy ratio (CAR) weighting standpoint.  She argues that doing so could improve access to debt finance for innovating firms and buttress sustainable finance initiatives.

Jan notes that climate change is increasingly adversely affecting value certainty in the UK housing market, mainly due to flooding.  This fact may provide further incentive for central banks to consider levelling the playing field for registered IP rights as loan security.    In this regard, she consulted Professor Nigel Wright, Nottingham Trent University’s Deputy Vice-Chancellor for Research and Innovation, a renowned flood modelling expert.  Wright’s research spans the use of computers to predict the movement of fluids in the natural and built environment, expanding into cross-disciplinary aspects of flood risk management and climate change adaptation. He agreed that there may be an adverse impact on land and property values due to climate change in the future.  Wright suggests that climate change will create risks other than flooding which may also impact asset value in the housing market. He counsels that there is insufficient data available to assess the likely impact on lender’s security value at present and advocates that additional research on the subject of lender’s exposure to flood risk.

Jan then examines the Basel Committee on Banking Supervision [1] and the Basel Accords [2] bank asset classification system as applied to intangibles. In finance, registered IP rights form part of the ‘intangibles’ asset class, non-physical assets with potential benefit in the long term [3].  Analysing the Basel Accords I-IV and statements on monetary policy published  in speeches of high-level central bank professionals, she constructs an exploratory case to ‘carve out’ registered granted IP rights from the wider intangibles asset class for prudential regulation purposes.   This original analysis contemplates designing a sustainable innovation finance system that will better support inventors, patent owners and SME operating companies, beyond the venture capital milestone.

Edited by Ole-Andreas Rognstad, Professor of Law, Department of Private Law and Centre for European Law and Inger B. Ørstavik, Professor of Law, Department of Private Law and Centre for European Law, University of Oslo, Norway this is a timely and thought-provoking book that argues for sustainable markets as an overreaching and contextual approach to the role of IP rights in tackling the challenges of sustainable development.  Fellow contributors include C. Banet, J.B. Eisen, D.J. Gervais, H.M. Haugen, K.J. Osenga, T. Pilhajarinne and P.K. Yu.

[1] The BSBS was established in 1974 and issued the first Basel Accord in 1988 followed by the second, third and fourth of the Basel Accords over the next two decades

[2]  Although they have no legal force, the Basel Accords are voluntarily adopted by member nations, see https://www.bis.org/bcbs/about/overview.htm?m=3%7C14%7C573 accessed on 18 June 2020

[3] Chris. B. Murphy, ‘How do tangible assets differ from intangible assets?’ (8 May 2019) Investopedia https://www.investopedia.com/ask/answers/012815/what-difference-between-tangible-and-intangible-assets.asp accessed on 11 January 2020.