<PAGE>

                                                                 EXHIBIT 10.17.1

                     COLLATERAL ASSIGNMENT, PATENT MORTGAGE
                            AND SECURITY AGREEMENT

     This Collateral Assignment, Patent Mortgage and Security Agreement is made
as of the 18th day of May 1994 by and between Natus Medical Incorporated.
("Assignor"), and Silicon Valley Bank, a California banking corporation
("Assignee").

                                   RECITALS

     A.   Assignee has agreed to lend or has lent to Assignor certain funds (the
"Loan"), pursuant to a Business Loan Agreement dated May 18, 1994 (the "Loan
Agreement") and Assignor desired to borrow such funds from Assignee. The Loan is
or will be evidenced by one or more promissory notes (a "Note" or, collectively,
the "Notes") and is or will be secured in part pursuant to the terms of a
Commercial Security Agreement dated May 18, 1994 (the "Security Agreement").

     B.   In order to induce Assignee to make or amend the terms of the Loan,
Assignor has agreed to assign certain intangible property to Assignee for
purposes of securing the obligations of Assignor to Assignee.

     NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:

     1.   Assignment, Patent Mortgage and Grant of Security Interest. As
          ---------------------------------------------------------
collateral security for the prompt and complete payment and performance of all
of Assignor's present or future indebtedness, obligations and liabilities to
Assignee, Assignor hereby assigns, transfers, conveys and grants a security
interest and mortgage to Assignee, as security, but not as an ownership interest
in and to Assignor's entire right, title and interest in, to and under the
following (all of which shall collectively be called the "Collateral"):

          (a)  Any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret, now or hereafter existing, created, acquired or
held, including without limitation those set forth on Exhibit A attached hereto
                                                      ---------
(collectively, the "Copyrights");

          (b)  Any and all trade secrets, and any and all intellectual property
rights in computer software and computer software products now or hereafter
existing, created, acquired or held;

          (c)  Any and all design rights which may be available to Assignor now
or hereafter existing, created, acquired or held;

          (d)  All patents, patent applications and like protections including,
without limitation, improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same, including without limitation
the patents and patent applications set forth on Exhibit B attached hereto
                                                 ---------
(collectively, the "Patents");

          (e)  Any trademark and servicemark rights, whether registered or not,
applications to register and registrations of the same and like protections, and
the entire goodwill of the business of Assignor connected with and symbolized by
such trademarks, including without limitation those set forth on Exhibit C
                                                                 ---------
attached hereto (collectively, the "Trademarks")

          (f)  Any and all claims for damages by way of past, present and future
infringements of any of the rights included above, with the right, but not the
obligation, to sue for and collect such damages for said use or infringement of
the intellectual property rights identified above;





<PAGE>

          (g)  All licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from such use
to the extent permitted by such license or rights; and

          (h)  All amendments, extensions, renewals and extensions of any of the
Copyrights, Trademarks or Patents; and

          (i)  All proceeds and products of the foregoing, including without
limitation all payments under insurance or any indemnity or warranty payable in
respect of any of the foregoing.

THE INTEREST IN THE COLLATERAL BEING ASSIGNED HEREUNDER SHALL NOT BE CONSTRUED
AS A CURRENT ASSIGNMENT, BUT AS A CONTINGENT ASSIGNMENT TO SECURE ASSIGNOR'S
OBLIGATIONS TO ASSIGNEE UNDER THE NOTE AND THE LOAN AGREEMENT.

     2.   Authorization and Request. Assignor authorizes and requests that the
          -------------------------
Register of Copyrights and the Commissioner of Patents and Trademarks record
this conditional assignment.

     3.   Covenants and Warranties. Assignor represents, warrants, covenants and
          ------------------------
agrees as follows:

          (a)  Assignor is now the sole owner of the Collateral, except for
exclusive and non-exclusive licenses granted by Assignor to its customers in the
ordinary course of business.

          (b)  Performance of this Assignment does not conflict with or result
in a material breach of any agreement to which Assignor is bound, except to the
extent that certain intellectual property agreements prohibit the assignment of
the rights thereunder to a third party without the licensor's or other party's
consent and this Assignment constitutes an assignment.

          (c)  During the term of this Agreement, Assignor will not transfer or
otherwise encumber any interest in the Collateral, except for non-exclusive
licenses granted by Assignor in the ordinary course of business or as set forth
in this Assignment;

          (d)  To its knowledge, each of the Patents is valid and enforceable,
and no part of the Collateral has been judged invalid or unenforceable, in whole
or in part, and no claim has been made that any part of the Collateral violates
the rights of any third party;

          (e)  Assignor shall promptly advise Assignee of any material adverse
change in the composition of the Collateral, including but not limited to any
subsequent ownership right of the Assignor in or to any Trademark, Patent or
Copyright not specified in this Assignment;

          (f)  Assignor shall (i) protect, defend and maintain the validity and
enforceability of the Trademarks, Patents and Copyrights, (ii) use its best
efforts to detect infringements of the Trademarks, Patents and Copyrights and
promptly advise Assignee in writing of material infringements detected and (iii)
not allow any Trademarks, Patents, or Copyrights to be abandoned, forfeited or
dedicated to the public without the written consent of Assignee, which shall not
be unreasonably withheld unless Assignor determines that reasonable business
practices suggest that abandonment is appropriate.

          (g)  Assignor shall promptly register the most recent version of any
of Assignor's Copyrights, if not so already registered, and shall, from time to
time, execute and file such other instruments, and take such further actions as
Assignee may reasonably request from time to time to perfect or continue the
perfection of Assignee's interest in the Collateral;

          (h)  This Assignment creates, and in the case of after acquired
Collateral, this Assignment will create at the time Assignor first has rights in
such after acquired Collateral, in favor of Assignee a valid and


<PAGE>

perfected first priority security interest in the Collateral in the United
States securing the payment and performance of the obligations evidenced by the
Note upon making the filings referred to in clause (i) below;

          (i)  To its knowledge, except for, and upon, the filing with the
United States Patent and Trademark office with respect to the Patents and
Trademarks and the Register of Copyrights with respect to the Copyrights
necessary to perfect the security interests and assignment created hereunder and
except as has been already made or obtained, no authorization, approval or other
action by, and no notice to or filing with, any U.S. governmental authority of
U.S. regulatory body is required either (i) for the grant by Assignor of the
security interest granted hereby or for the execution, delivery or performance
of this Assignment by Assignor in the U.S. or (ii) for the perfection in the
United States or the exercise by Assignee of its rights and remedies thereunder;

          (j)  All information heretofore, herein or hereafter supplied to
Assignee by or on behalf of Assignor with respect to the Collateral is accurate
and complete in all material respects.

          (k)  Assignor shall not enter into any agreement that would materially
impair or conflict with Assignor's obligations hereunder without Assignee's
prior written consent, which consent shall not be unreasonably withheld.
Assignor shall not permit the inclusion in any material contract to which it
becomes a party of any provisions that could or might in any way prevent the
creation of a security interest in Assignor's rights and interest in any
property included within the definition of the Collateral acquired under such
contracts, except that certain contracts may contain anti-assignment provisions
that could in effect prohibit the creation of a security interest in such
contracts.

          (l)  Upon any executive officer of Assignor obtaining actual knowledge
thereof, Assignor will promptly notify Assignee in writing of any event that
materially adversely affects the value of any material Collateral, the ability
of Assignor to dispose of any material Collateral of the rights and remedies of
Assignee in relation thereto, including the levy of any legal process against
any of the Collateral.

     4.   Assignee's Rights.  Assignee shall have the right, but not the
          -----------------
obligation, to take, at Assignor's sole expense, any actions that Assignor is
required under this Assignment to take but which Assignor fails to take, after
fifteen (15) days' notice to Assignor. Assignor shall reimburse and indemnify
Assignee for all reasonable costs and reasonable expenses incurred in the
reasonable expenses incurred in the reasonable exercise of its rights under this
section 4.

     5.   Inspection Rights. Assignor hereby grants to Assignee and its
          -----------------
employees, representatives and agents the right to visit, during reasonable
hours upon prior reasonable written notice to Assignor, and any of Assignor's
plants and facilities that manufacture, install or store products (or that have
done so during the prior six-month period) that are sold utilizing any of the
Collateral, and to inspect the products and quality control records relating
thereto upon reasonable written notice to Assignor and as often as may be
reasonably requested, but not more than one (1) in every six (6) months;
provided, however, nothing herein shall entitle Assignee access to Assignor's
trade secrets and other proprietary information.

     6.   Further Assurances; Attorney in Fact
          ------------------------------------

          (a)  On a continuing basis, Assignor will, subject to any prior
licenses, encumbrances and restrictions and prospective licenses, make, execute,
acknowledge and deliver, and file and record in the proper filing and recording
places in the United States, all such instruments, including appropriate
financing and continuation statements and collateral agreements and filings with
the United States Patent and Trademarks Office and the Register of Copyrights,
and take all such action as may reasonably be deemed necessary or advisable, or
as requested by Assignee, to perfect Assignee's security interest in all
Copyrights, Patents and Trademarks and otherwise to carry out the intent and
purposes of this Collateral Assignment, or for assuring and confirming to
Assignee the grant or perfection of a security interest in all Collateral.

          (b)  Assignor herby irrevocably appoints Assignee as Assignor's
attorney-in-fact, with full

<PAGE>

authority in the place and stead of Assignor and in the name of Assignor,
Assignee or otherwise, from time to time in Assignee's discretion, upon
Assignor's failure or inability to do so, to take any action and to execute any
instrument which Assignee may deem necessary or advisable to accomplish the
purpose of this Collateral Assignment, including:

               (i)  To modify, in its sole discretion, this Collateral
Assignment without first obtaining Assignor's approval of or signature to such
modification by amending Exhibit A, Exhibit B and Exhibit C hereof, as
appropriate, to include reference to any right, title or interest in any
Copyrights, Patents or Trademarks acquired by Assignor after the execution
hereof or to delete any reference to any right, title or interest in any
Copyrights, Patents or Trademarks in which Assignor no longer has or claims any
right, title or interest; and

               (ii) To file, in its sole discretion, one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of Assignor where permitted by law.

     7.   Events of Default.  The occurrence of any of the following shall
          -----------------
constitute an Event of Default under the Assignment:

          (a)  An Event of Default occurs under the Loan Agreement or any Note;
or

          (b)  Assignor breaches any warranty or agreement made by Assignor in
this Assignment.

     8.   Remedies. Upon the occurrence and continuance of an Event of Default,
          --------
Assignee shall have the right to exercise all the remedies of a secured party
under the California Uniform Commercial Code, including without limitation the
right to require Assignor to assemble the Collateral and any tangible property
in which Assignee has a security interest and to make it available to Assignee
at a place designated by Assignee. Assignee shall have a nonexclusive, royalty
free license to use the Copyrights, Patents and Trademarks to the extent
reasonably necessary to permit Assignee to exercise its rights and remedies
upon the occurrence of an Event of Default. Assignor will pay any expenses
(including reasonable attorney's fees) incurred by Assignee in connection with
the exercise of any of Assignee's rights hereunder, including without limitation
any expense incurred in disposing of the Collateral. All of Assignee's rights
and remedies with respect to the Collateral shall be cumulative.

     9.   Indemnity. Assignor agrees to defend, indemnify and hold harmless
          ---------
Assignee and its officers, employees, and agents against: (a) all obligations,
demands, claims, and liabilities claimed or asserted by any other party in
connection with the transactions comtemplated by this Agreement, and (b) all
losses or expenses in any way suffered, incurred, or paid by Assignee as a
result of or in any way arising out of, following or consequential to
transactions between Assignee and Assignor, whether under this Assignment or
otherwise (including without limitation, reasonable attorneys fees and
reasonable expenses), except for losses arising from or out of Assignee's gross
negligence or willful misconduct.

     10.  Reassignment. At such time as Assignor shall completely satisfy all of
          ------------
the obligations secured hereunder, Assignee shall execute and deliver to
Assignor all deed, assignments, and other instruments as may be necessary or
proper to reinvest in Assignor full title to the property assigned hereunder,
subject to any disposition thereof which may have been made by Assignee pursuant
hereto.

     11.  Course of Dealing. No course of dealing, nor any failure to exercise,
          -----------------
nor any delay in exercising any right, power or privilege hereunder shall
operate as a waiver thereof.

     12.  Attorneys' Fees. If any action relating to this Assignment is brought
          ---------------
by either party hereto against the other party, the prevailing party shall be
entitled to recover reasonable attorneys fees, costs and disbursements.

     13.  Amendments.  This Assignment may be amended only by a written
          ----------
instrument signed by both













<PAGE>

parties hereto.

     14.    Counterparts.  This Assignment may be executed in two or more
            ------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.

     15.    California Law and Jurisdiction.  This Assignment shall be governed
            -------------------------------
by the laws of the State of California, without regard for choice of law
provisions.  Assignor and Assignee consent to the nonexeclusive jurisdiction of
any state or federal court located in Santa Clara County, California.

     16.    Confidentiality.  In handling any confidential information,
            ---------------
Assignee shall exercise the same degree of care that it exercises with respect
to its own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or received
pursuant to this Assignment except that the disclosure of this information may
be made (i) to the affiliates of the Assignee, (ii) to prospective transferee or
purchasers of an interest in the obligations secured hereby, provided that they
have entered into comparable confidentiality agreement in favor of Assignor and
have deliver a copy to Assignor, (iii) as required by law, regulation, rule or
order subpoena judicial order or similar order and (iv) as may be required in
connection with the examination, audit or similar investigation of Assignee.

     IN WITNESS WHEREOF, the parties hereto have executed this Assignment on the
day and year first above written.

Address of Assignor                          ASSIGNOR:

1501 Industrial Road                         Natus Medical Incorporated
-----------------------------

San Carlos CA 94070                          By: /s/ William New, Jr
-----------------------------                    -----------------------------
                                                 Name: William New, Jr
                                                 -----------------------------
                                                 Title: Chairman & CEO
                                                 -----------------------------
<PAGE>

                          ALL-PURPOSE ACKNOWLEDGEMENT
================================================================================

  State of California                             CAPACITY CLAIMED BY SIGNER
  County of Santa Clara

  On 8/1/94 before me,                            [_] INDIVIDUAL(S)
  Jeff Huhn, personally appeared                  [X] CORPORATE_____________
  William New, [_] personally known to            OFFICER(S)________________
  me -OR- [X] proved to me on the basis of        TITLE(S)__________________
  satisfactory evidence to the person(s)          [_] PARTNER(S)
  whose name(s) is/are subscribed to the          [_] ATTORNEY-IN-FACT
  within instrument and acknowledged to me        [_] TRUSTEE(S)
  that he/she/they executed the same in           [_] SUBSCRIBING WITNESS
  his/her/their authorized capacity(ies), and     [_] GUARDIAN/CONSERVATOR
  that by his/her/their signature(s) on the       [_] OTHER:________________
  instrument the person(s), or the entity upon
  behalf of which the person(s) acted, executed
  the instrument.

  Witness my hand and official seal.              SIGNER IS REPRESENTING:
                                                  NAME OF PERSON(S) OR
                                                  ENTITY(IES)

  /s/ Jeff Huhn                                   Natus Medical
  ------------------------                        --------------------------
     SIGNATURE OF NOTARY                          __________________________
                                                  ___________
================================================================================

     ========================================
     [SEAL]  JEFF HUHN
             Comm. # 358463
           NOTARY PUBLIC - CALIFORNIA
               ALAMEDA COUNTY
           My Comm. Expires Jan. 20, 1996
     ========================================


<PAGE>

Exhibit "A" attached to that certain Collateral Assignment, Patent Mortgage and
Security Agreement dated ___, 19__.

                                  EXHIBIT "A"
                                  COPYRIGHTS


SCHEDULE A - ISSUED COPYRIGHTS
------------------------------

COPYRIGHT       REGISTRATION            DATE OF
DESCRIPTION        NUMBER               ISSUANCE
-----------     ------------            --------


SCHEDULE B - PENDING COPYRIGHT APPLICATIONS
-------------------------------------------

                                                   FIRST DATE
COPYRIGHT       APPLICATION   DATE OF   DATE OF     OF PUBLIC
DESCRIPTION        NUMBER     FILING    CREATION   DISTRIBUTION
-----------     -----------   -------   --------   ------------


SCHEDULE C - UNREGISTERED COPYRIGHTS (Where No Copyright Application is Pending)
--------------------------------------------------------------------------------


                                                              DATE AND
                                                              RECORDATION NUMBER
                                               ORIGINAL       OF ASSIGNMENT TO
                                               AUTHOR OR      ASSIGNOR (IF
                                               OWNER OF       ORIGINAL AUTHOR OR
                            FIRST DATE         COPYRIGHT      OWNER OF COPYRIGHT
COPYRIGHT      DATE OF          OF           (IF DIFFERENT    IS DIFFERENT FROM
DESCRIPTION   CREATION     DISTRIBUTION      FROM ASSIGNOR         ASSIGNOR
-----------   --------     ------------      -------------    -----------------
<PAGE>

Exhibit "B" attached to that certain Collateral Assignment, Patent Mortgage and
Security Agreement dated ______, 19__.

                                  EXHIBIT "B"
                                    PATENTS

PATENT
DESCRIPTION    DOCKET NO.     COUNTRY   SERIAL NO.     FILING DATE    STATUS
-----------    ----------     -------   ----------     -----------    ------
<PAGE>

Exhibit "C" attached to that certain Collateral Assignment, Patent Mortgage and
Security Agreement dated ______, 19__.


                                  EXHIBIT "C"

                                  TRADEMARKS

TRADEMARK
DESCRIPTION     COUNTRY     SERIAL NO.     REG. NO        STATUS
-----------     -------     ----------     -------        ------
<PAGE>

                                   EXHIBIT B
                                    PATENTS

<TABLE>
<CAPTION>
PATENT
DESCRIPTION                DOCKET NO.              COUNTRY              SERIAL NO.     FILING DATE         STATUS
-----------                ----------              -------              ----------     -----------         ------
                           (application NO)
<S>                        <C>                     <C>                  <C>            <C>                 <C>
In-Vivo measurement
of End-tidal carbon
Monoxide Concentration
Apparatus and Methods        899,261               United States        5,293,875      June 16, 1992       Issued 3/15/94


Filter Unit for an End Tidal
Carbon Monoxide Monitor                            United States        29/003,880     Jan. 21, 93         Pending
                                                                        7-990,425      Dec. 15, 92         Pending


Earpiece for Auditory
Testing of Infants           735,423               United States        4,930,520      May 16, 85          Issued 6/5/90


Acoustically Sealing Earmuff
for an Infant                                      United States        5,243,709      Sept. 4, 91         Issued 9/14/93
                                                                        07/754,822


Auditory Response Detection
Method and Apparatus                               United States        4,275,744      June 30, 81         Licensed to
                                                                                                           Natus Medical
                                                                                                           Inc. 1988
</TABLE>
<PAGE>

                                   EXHIBIT C
                                  TRADEMARKS


TRADEMARK
DESCRIPTION           COUNTRY          SERIAL NO.     REG. NO     STATUS
-----------           -------          ----------     -------     ------

Natus(R)              United States    74/073,532     1,637,520   Current

Ear Couplers(R)       United States    74/073,588     1,683,696   Current

Algo-1 Plus(R)        United States    74/073,582     1,676,656   Current

Jelly Button(R)       United States    74/073,534     1,640,360   Current

Algo 1(R)             United States                   1,423,751   Expired

Baby's Breath(TM)     United States

Mini Muffs(TM)        United States

Dri Prep(TM)          United States