INTELLECTUAL PROPERTY&SECURITY INTERESTS: A US PERSPECTIVE

Abstract

It is no secret that intellectual property can be a valuable business asset. As I.B.M.’s CEO, Samuel Palmisano, said, “ [I]ntellectual property is the crucial capital in a global knowledge economy.” 1 Expressing the same sentiment, a recently published article states that the “ driving force behind many of the mergers and acquisitions completed during the past decade has been the acquirer’s desire to obtain the target’s IP assets. Now, more than ever, the full financial potential of IP is being realized as an additional source of funding to facilitate research and development, acquisitions, and other commercial transactions.” 2 Despite this, a basic business transaction involving intellectual property, a secured loan, has many traps for the imprudent attorney or lender. The American Bar Association Task Force on Security Interests in Intellectual Property concluded that “ [t]he current state of the law governing security interests in intellectual property is unsatisfactory. There is uncertainty as to where and how to file, what constitute notice of a security interest, who has priority, and what properly is cover by a security interest.” 3 Reform of American laws has been long advocated in order to reduce uncertainty, but progress has been slow. As such, this article intends to inform foreign attorneys of the basic problems when securing a loan with intellectual property collateral under United States law.