Summary

There are an increasing number of companies today whose most valuable assets are not real estate or equipment, but intellectual property, including industrial property (e.g. trademarks or patents). Therefore, one might think that one of the ways of expanding a business could be to raise capital on the security of industrial property by pledging it, for example. In practice, pledging industrial property is rather rare, both in Estonia and in other countries. However, for small and medium-sized enterprises in particular, this means more limited opportunities to expand their business through traditional bank loans.

The low level of industrial property pledging may be due to various factors such as the structure of the economy or the low level of protection of industrial property in the country. Other reasons cited in the legal literature include the possibility of rapid changes in the value of industrial property and the difficulty of assessing its value, as well as the fact that the legal provisions applicable to the pledge of industrial property are, as a rule, designed for the pledge of corporeal objects and, therefore, do not take sufficient account of the specific characteristics of intellectual property.

In the present article, the authors analyse the current Estonian law on the pledge of industrial property and propose amendments that would clarify the relevant regulation and thereby contribute to a more active use of industrial property as a credit guarantee.