Security Interests in Intellectual Property

Perfecting a security interest in intellectual property involves determining the appropriate filing venue. In general, Article 9 of the Uniform Commercial Code (“Article 9”) applies to transactions intended to create a security interest.  However, Article 9 can be preempted by certain federal laws authorizing other procedures for recording liens. For patents and trademarks, the United States Patent and Trademark Office (“USPTO”) governs assignments of such property. For patents, any assignment is void against a subsequent good faith purchaser (a bona fide purchaser) unless it is recorded in the USPTO within 3 months from the date of the purchase. For trademarks, a current or pending mark must be registered with the USPTO within the same time frame, with a priority date from the execution of the assignment, not the date of recordation.  Copyrights can be assigned by a written document recorded pursuant to 17 U.S.C. § 205(c) with the United States Copyright Office. 

Once the assignments are made, they can be perfected in patents and trademarks by filing a UCC financing statement at the appropriate state office. Presently, the law is unsettled with regard to the rights of a bona fide purchaser for value, or of a lender who has filed a mortgage with the USPTO, so it remains prudent to file with both the state and federal offices with regard to patents. A similar precaution can be taken with trademarks, but care should be used if the collateral includes “intent to use” registrations, which are prohibited from assignment except as part of the sale of an entire enterprise. Errant assignments can inadvertently lead to cancellation of a trademark registration.  For copyrights, as noted above, the proper method for recording a security interest involves recording the interest with the United States Copyright Office.

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