July 27, 2010
Intellectual Property Alerts

How to Perfect Security Interests in Copyrights, Trademarks and Domain Names
by Cyrus Wadia

Commercial lenders are more frequently securing not only a borrower's tangible assets as collateral for a loan, but intangible intellectual property (IP) assets as well.  Although the asset class is different, the methods of securing both tangible and intangible interests are similar, with the fundamental concept being to put the public on constructive notice of the lenders priority claim in the borrowers' assets.  To perfect a security interest in IP, the lender must look to both state and federal law.  This alert provides general guidance for perfecting security interests in copyrights, trademarks and domain names.
Uniform Commercial Code (UCC) Filing.  The UCC-1 financing statement (Financing Statement) also covers securing interests in IP assets as personal property.  If the borrower resides In California, such Financing Statements must be filed with the California Secretary of State.  To the extent that federal law preempts state UCC requirements in the UCC, that secretary of state filing may not be enough to perfect a security interest in federally-registered assets, so lenders must also consider whether and how to perfect such claims with the federal government.
Trademarks.  The Lanham Act does not address how to perfect security interests in federally-registered trademarks.  So a UCC-1 filing would be sufficient for perfecting the interest.  However, the U.S. Patent & Trademark Office (USPTO) also provides a simple procedure for recording a security interest online, and that is generally advised for the usual reasons (putting subsequent owners on notice, etc.).  To complete that USPTO recordation of a security interest, the lender needs (1) correspondence information; (2) conveying party corporate information (3) receiving party corporate information; (4) date of execution; (5) list of trademarks that are the subject of the recording; and (6) copy of the security interest document/s to be recorded.  Generally, the USPTO gives you an acknowledgement within five working days.  So both a UCC-1 filing to cover all the federal trademarks (and state and common law marks to the extent they exist) and federal trademark recordation are advisable.   
Copyrights.  The Copyright Act specifies how to record security interests in copyrights, therefore to the extent that a lender is concerned about perfecting security interests in registered copyrights, recordation with the U.S. Copyright Office is likely sufficient.  (See, 17 USC Sections 101, 205.)  The lender must generally record the security interest with the U.S. Copyright Office.  See In re Peregrine Entertainment, Ltd. v. Capitol Federal Savings & Loan Association of Denver, 116 B.R. 194 (CD Cal 1990).  Instructions and detailed circulars on the topic are available here.  For unregistered copyrights, a state UCC-1 filing would be appropriate to perfect that security interest.

Domain Names.  There is no specific guidance as to perfection of security interests in domain names, but to the extent that security agreements include such domain names include domain names as collateral, perfection via a UCC-1 filing listing the domain names is also advisable.
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