Intellectual Property in Banking Credit Guarantee

The consequence of Indonesia’s participation as a member of the World Trade Organization (WTO) is to take important steps including aligning the laws and regulations in the field of Intellectual Property (IP) with the provisions of the Trade-Related Aspects of Intellectual Property Rights (TRIPs) Agreement.

This includes following the developments of the global community, where IP is one of the accesses to obtain international banking credit. It is noted that IP (such as copyright, patent, and trademark) has become a source of bank financing. Even the inclusion of Intellectual Property as a guarantor, is to ensure security for creditors by taking over all company assets, as well as adding a line of financial resources for debt recovery.

This causes business people who have products that are protected by IP law to access bank credit in order to develop their businesses that require capital. This capital is one of the factors that determine the development of a business.

Concept of Intellectual Property as Collateral Object in Fiduciary Guarantee System

The meaning of legal benefits and legal functions is basically an assessment of the meaning of a legal regulation. The modern legal concept has a function to provide legal certainty and legal protection from the enactment of a legal regulation. Conceptually, a fiduciary guarantee is a guarantee that is material in nature, after the object that has a fiduciary burden is registered at the Fiduciary Registration Office.

Article 1 paragraph (1) of Law no. 42. Year 1999 regarding Fiduciary Guarantee which stipulates that what is meant by fiduciary is the transfer of ownership rights to an object on the basis of trust provided that the object whose ownership rights are transferred remains in the control of the object owner. Fiduciary Guarantee is a security right on movable objects, both tangible and intangible and immovable objects, especially buildings that cannot be encumbered with Mortgage Rights.

From the legal aspect, the Fiduciary Guarantee gives preference (right to be paid first) over other creditors. Law No. 28 of 2014 regarding Copyright (UUHC) among others regulates:

  1. Copyright is an intangible movable object. (Article 16 paragraph (1))
  2. Copyright can be used as an object of fiduciary guarantee. (Article 16 paragraph (3))
  3. Provisions regarding Copyrights as objects of fiduciary guarantees are implemented in accordance with the provisions of laws and regulations. (article 16 paragraph (4))


Banks are required to calculate the Allowance for Asset Losses (AAL), the worse the asset quality, the greater the AAL that must be calculated. If a credit is accompanied by collateral, it can reduce the calculation of AAL, namely collateral that is determined on a limited basis. The collateral that can be obtained must be accompanied by valid legal documents, bound by laws and regulations with preference rights and protected by insurance.

The activity of providing credit/financing is entirely the authority of the bank based on the results of the assessment of the prospective debtor. Normatively, IP, which includes copyright, can be used as fiduciary guarantees, but there is no certainty regarding valuation as the basis for banks in calculating AAL as part of the application of the precautionary principle. Clear regulations and evaluation mechanisms are needed to guarantee legal certainty of IP Law.

By law, every registered Trademark and obtaining a Trademark Rights Certificate can be guaranteed on a fiduciary basis. However, to protect it from the possibility of non-completion of the debt on the guarantee, the trademark that is accepted as collateral for bank credit is the brand of a company that is developing forward because it has a high economic value. Trademarks of companies and companies, jointly or individually, each have economic value.

Article 16 paragraph (3) of the UUHC explains that Copyrights can be used as objects of fiduciary guarantees. Still in the same article, it is explained that Copyright is an intangible movable object. It can be transferred or transferred, either in whole or in part. It can also be inherited, donated, waqf, or willed. This is the reason why it can be used as collateral.

For example, a songwriter needs a credit loan from a bank, he can use the copyright for songs that have been created as collateral for credit at the bank. However, this is still not effective because Indonesia has not provided a provision regarding the use of copyright as collateral in the banking credit distribution system. In Indonesia, there is also no appraisal agency that has the ability to provide an assessment of the economic value of Copyrights.

Patent Rights can also be a Fiduciary Guarantee. Based on Article 1 paragraph (1) of Law no. 13 of 2016 regarding Patents (UUPaten), that Patents are exclusive rights granted by the state to investors for their inventions in the field of technology for a certain period of time to carry out the invention themselves or give approval to other parties to implement them.

Article 5 paragraph (1) of the Fiduciary Guarantee Law explains that the assignment of objects with fiduciary guarantees is made with a notarial deed in Indonesian and is a fiduciary guarantee deed.

Each bank has different requirements for applying for credit. In practice, there are still few banks that are willing to accept IP as a guarantee object in the Fiduciary Guarantee System. Currently, one of the ways that can be expected from the creative economy sector to increase the added value of this sector is intellectual property. To that end, the Government through the Directorate General of Intellectual Property of the Ministry of Law and Human Rights (Kemenkumham) and the Ministry of Tourism and Creative Economy/Tourism and Creative Economy Agency are intensively seeking to create an intellectual property-based financing scheme.

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