Some authors avoid novation problems by not granting new security interests, but state that the patent security agreement is only a notification of the rights of the previous agreement. Others simply submit a UCC-1 that complies with a security agreement with the PTO without preparing a patent security agreement. Raffel, a manufacturer of electronic controls for seating, bed linen and industrial marketplaces, has entered into an “intellectual property security agreement” with two different banks, which grants banks security over all of their intellectual property. Banks have submitted notices of their hedging interests to the USPTO. Soon after, Raffel sued Man Wah for patent infringement and other means. In response, Man dismissed Wah Raffel`s patent infringement lawsuits on the grounds that Raffel did not have the right to bring an infringement action because the security agreements transferred ownership of Raffel`s intellectual property to the banks. There are two typical scenarios in which intellectual property is used as collateral. In one case, a lender grants loans with intellectual property assets as collateral. If the borrower does not comply with his credit obligations, the lender is entitled to pledge the guarantee. But if the lender has failed to properly complete its security right in the collateral, the lender will be relegated to unsecured creditor status, will not be able to close the collateral, and may not be able to offset its losses. The trial court held that granting an intellectual property right and registering that security right with the USPTO did not transfer ownership of Raffel`s patents to the banks, and Raffel therefore retained the right to enforce patents.
For loans based on patent assets, lenders first enter into a general security agreement that grants them a security right in patents and other assets. The lender then submits a financing statement (UCC-1) under the State`s Uniform Commercial Code and its rights are perfected. The lending of intellectual property assets (including copyrights, trademarks, patents and domain names, collectively, “Intellectual Property”) is once again becoming an important financing tool for lenders and intellectual property owners to maximize the value of their transactions. Lenders get the security of a viable property as collateral and borrowers have something more to offer with their intellectual property. However, the rules for securitization, refinement and foreclosure of intellectual property security rights are not easy to navigate. As IP lending increases in the digital age, it is important not to overlook the key elements of securitization that can make the difference between real security and actual loss. There is only one problem: they offer very little security. The courts recognize that the creation of a second security creation (by novation) may nullify the prior grant of a security right in the same security. This may be the case if the second security arrangement is a contract with consideration, contains a new concession of the same security rights and adds new rights or obligations.
Unfortunately, it is not uncommon to discover that a lender, whether a financial institution or otherwise, has not properly documented or secured its interest in an intellectual property guarantee offered by a borrower to secure a promissory note and loan. In some cases, failure to do so at the beginning can affect a lender`s priority or guarantee with serious consequences. And it is rare that a complete “retrospective” repair is available. Unlike a UCC-1, this is not just a clue. This is a new contract that restores the same patent security right that was previously granted. A patent security agreement is supported by new considerations and may contain new obligations (p.B filing with the OTP and regularly updating the patent list). California law recognizes domain names as intangible property subject to the same laws that govern intellectual property.4 Since there are no federal laws specifically governing the perfection of security rights in domain names, these interests can be further developed by registering a UCC-1 financing statement that lists domain names and all related names: (a) goodwill, (b) intellectual property, (c) accounts, receivables, general intangible assets, instruments and intangible assets derived from the use of the domain. (d) the product. Trademarks and service marks protect the names, symbols, words, designs, slogans or combinations thereof used by a company to identify and distinguish its products or services from those provided or manufactured by others. Trademarks registered by the state are subject to the Lanham Act, while trademarks not registered and registered by the state are subject to state law.
Unlike the Copyright Act, the Lanham Act does not explicitly prejudge state law regarding the perfection of security rights in crown trademarks. Accordingly, a secured creditor should always perfect its interests under the UCC. However, in order to fully protect the secured creditor from subsequent buyers, the security right in a federally registered trademark should also be registered with the USPTO. A patent owner did not lose the opportunity to bring a patent infringement action when they entered into a security agreement covering all of their intellectual property, and the agreement was registered with the USPTO billions of dollars lent each year to growing emerging companies are guaranteed by patent security agreements. Nearly 100,000 patent security agreements have been filed with the U.S. Patent and Trademark Office (PTO). A patent security agreement is a security agreement that is limited to patents only and is filed only with the PTO. A PTO submission is not a perfect interest, but only notifies those who see the submission by chance. It is best to avoid the ABA`s “double filing” strategy of preparing a general security agreement and then preparing a second security agreement for the same patents. It is not necessary, but there is a risk of concluding successive contracts that grant the same rights. To guard against this risk, they are preparing a patent security agreement that restores the same security rights in patents, but is filed with the PTO, not as A UCC-1.
This common “double deposit” strategy is approved by the American Bar Association. The Copyright Act defines a detailed system for the registration and transfer of ownership rights in copyrighted works. Under copyright law, if a copyright has been registered, a security right can only be perfected by registering a transfer with the Copyright Office.1 However, if a copyright is not registered, copyright law does not prejudge UCC with respect to the perfection and priority of security rights.2 A party that receives a security right in a patent may register the security agreement with the USPTO to protect itself and notify bona fide buyers or subsequent mortgagees. However, standard security agreements that do not include language that assigns title to patents do not prevent the patent owner from bringing a patent infringement action. This case shows how useful it is to design the security agreement in such a way that intellectual property is not transferred to the lender while the loan is in progress. But curiously, perfection doesn`t seem to be enough for a lender. Many lenders fear that federal patent laws will preempt state UCC laws and that they will lose their rights to patent guarantees. Accordingly, security rights in unregistered copyright need to be further developed in accordance with Article 9 of the UCC. However, once the unregistered works are registered, copyright law automatically applies and the security right must then be re-registered with the U.S. Copyright Office. Therefore, depending on the type of copyrighted works, it is advisable to require a borrower to register the copyrighted material with the Copyright Office and register the security right with the UCC while the application is pending. .