Dysfunctional Regulations and Ineffective Implementation of Intellectual Property Rights-Based Banking Collateral: A Critical Analytical Study

This research carried out a critical analytical study of Intellectual Property Rights–IPRs (focused on Copyright, Patent, and Trademark) as important industrial and commercial property also as business capital. By conducting juridical normative methods with descriptive explanatory research, this research started with inevitable facts concerning the effect and further potential of IPRs assets in a business. However, although proved to have high economic visibility, the pledging of these IPRs asset as banking collateral may lead to some difficulties and challenges, in the terms of IPRs assets or the law applicable to its pledge process and the implementation mechanism in practical scope. The result shows IPRs–Based Banking Collateral becomes ineffective caused by dysfunctional regulations as domestic law failed to provide harmonious ground to implement the IPRs Based Collateral. The main challenge lies in harmonization and the development of relevant implementing regulations. We suggest ''a double cover'' mechanism for IPRs based collateral binding. This method expects to solve the practical problems and provide better access to funding for intellectual capital-based–businesses, also the safety and guarantee for the banking institution in implementing prudential banking principles. This “Double Cover Method” also creates massive opportunities for IPRs–Based Collateral in creating a weightless economy with high potential economic growth. The implications of this study are relevant to the development of both intellectual property and banking regulations and practices.