This article aims at contributing to academic debates on PIL rules on security interest in IP using functional analysis. Functional analysis here means a method to take a legal rule as a mechanism which brings about certain effects, to analyze conditions under which the effects would be produced, and to seek possible directions to improve the legal rule. Security interests in IP represent a convergence of three fields of law, i.e. IP, PIL and security interest law. Therefore, an integral platform where these three fields could be analyzed on an equal level would be needed. Functional analysis provides such a platform. For this purpose, this article first clarified the functions of security interest and its conditions, then identified which option as a PIL rule would be appropriate for each condition of the individual function of security interest in IP. Perspectives from both states’ and parties’ interests should be properly integrated in the analytical process. Lastly, the scope and conditions of party autonomy as well as objective connecting factors were identified. The outcome of this analysis provides tools to clarify not fully conceived parts of previous discussions. The CLIP Principles were compared with our proposals from this perspective.