When a person (or a business) seeking a loan for certain amount of time provides his asset(s) to the lender as an evidence of security, this process is termed as collateralization and the assets are referred to as collaterals normally. Copyright collateral is a term used when a person uses his copyright license (or even sometimes his copyrights) while taking the loan as a security to the lender. A legal written contract is drafted in this process and this written contract is called copyright collateral agreement and it binds all the terms and condition taking in consideration the state federal laws.
Copyright collateral agreements are a normal practice in creative media industry like music, video games and sound recordings. Some technology organization possessing rights of some software also practice this agreement. This agreement makes it easier for start up businesses to obtain financing from the financers in the market by transferring valuable copyrights to the lender for securing the loan.
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