IPR GROUP observation of IP practice. Digest # 8, 2014

Matthew J. Curran, Esq. and Andrew P. Cernota, Esq.

Attorney at Law



Security Interests in Intellectual Property

 In the United States, statutory regimes provide for the recordation of ownership interests in the various forms of intellectual property. The recordation regimes and the effect of recordation on those interests differ depending on the type of property and the type of interest.


Security Interests in Patents

 Assignments, grants and conveyances in US patent rights must be recorded. Typically, this is done through recordation with the United States Patent and Trademark Office (USPTO) assignment division and provides notice to the world, securing the filer priority against “subsequent purchaser[s] or mortgagee[s].” Recordation of security interests with the USPTO is never explicitly addressed, but is permitted. Whether such a filing is sufficient to perfect a security interest then relies on judicial interpretation.

 This issue has been resolved by a line of cases stretching from the 1970’s to the 1990’s. The first court to address this issue interpreted the statute literally, finding that a security interest was not equivalent to an assignment, grant, or conveyance, and holding that preemption did not apply, making recordation with the state under the Uniform Commercial Code (UCC) as security interests in general intangibles a legitimate mechanism for perfection of the interest. Later courts clarified that a UCC recordation alone would be effective if the subsequent interest holder was a lien holder, but not where the subsequent interest holder was a purchaser or mortgagee, as these later types of interests were specifically addressed in 35 USC § 261 and the UCC, as state law, was thus preempted by the Federal statute. Other courts have found that recordation of liens under the UCC is critical to the perfection of those interests, as distinguished from those interests that are specifically named in the statute.

 It is, therefore, prudent to record security interests with both the USPTO Assignment division and the appropriate state authority to comply with the mandate of the UCC.


Security Interests in Trademarks

 As with patents, statutory and regulatory provision is made for the recordation of transfers in ownership in trademarks.  Specifically, “[a]n assignment shall be void against any assignment for valuable consideration without notice, unless the prescribed information reporting the assignment is recorded in the Patent and Trademark Office within 3 months after the date of the subsequent purchase or prior to the subsequent purchase.”

 As with security interest in patents, the applicable trademark statutes do not explicitly address security agreements, but recordation with the USPTO is permitted. The USPTO has indicated this is to “give third parties notification of equitable interests or other matters relevant to the ownership of the mark.” Again, it is left up to judicial determination whether filing with the USPTO or under the UCC is proper.

 Courts have consistently found that, to perfect a security interest in a trademark, the interest need only be recorded under the UCC as intangible property. The Lanham Act’s silence is interpreted to mean that the UCC is not preempted as a legitimate means for providing notice. Since notice would defeat the subsequently obtained rights of a bona fide purchaser for value, recordation of a security interest with the USPTO, while not required, is still prudent as a supplement to UCC registration, providing a national notice forum that is among the first checked by potential purchasers.


Security Interests in Copyrights

 Similarly to patents and trademarks, statutory and regulatory provision is made for the recordation of transfers in ownership in copyrights. The Copyright Act defines “transfer” broadly as the “assignment, mortgage, exclusive license, or any other conveyance, alienation, or hypothecation of a copyright.” This statute has been judicially interpreted to cover security agreements, preempting the UCC. Later judicial interpretation expanded the requirements for perfection by adding that the copyright subject to the security interest must also be registered. This led later courts to the conclusion that filing under the UCC is appropriate for unregistered copyrights.



 As the foregoing discussion illustrates, it is a matter of judicial interpretation whether federal law or the UCC governs perfection of security interests in trademarks, copyrights, and patents. Although the courts have largely cleared up any ambiguities, the prudent lender would be well advised to perfect its security interest by filing under both systems, and, when necessary, to search both systems for prior encumbrances of the pledged collateral. Even though filing under only one system is appropriate, filing under both will enhance the interest holder’s ability to put subsequent creditors on inquiry and constructive notice as well as insuring that the security interest was properly filed in all cases.

© Matthew J. Curran, Esq. and Andrew P. Cernota, Esq.


Matthew J. Curran

CurranMatthew J. Curran is a registered patent attorney with Maine Cernota and Rardin. Having joined in August 2013, he is the firm’s newest addition. Besides being registered to practice before the United States Patent and Trademark Office, he is also admitted to practice law in Massachusetts and New Hampshire as well as before the United States District Court for the District of New Hampshire.

Matthew earned his B.S. and M.S. from the University of Massachusetts at Lowell, in Plastics Engineering, a unique blend of chemistry and mechanical engineering that is well known for giving graduates a firm grasp of engineering principles that enable them to hit the ground running. He then studied at the University Of New Hampshire School Of Law, formerly Franklin Pierce Law Center, where he received his J.D., while focusing heavily on Intellectual property.

Andrew P. Cernota

CernotaAndrew P. Cernota is a member of the firm a registered patent attorney. He has been with the firm since 2001. He is registered to practice before the Unites States Patent and Trademark Office, the New Hampshire Supreme Court, the US District Court for the District of New Hampshire, and the United States Court of Appeals for the Federal Circuit.

Andrew earned his A.B. from Dartmouth College in Chemistry (Physical and Inorganic). He studied at Franklin Pierce Law center where he received his J.D. and L.L.M. in Intellectual Property.

Andrew heads the firm’s Trademark Department and advises and assists clients with the selection, licensing, protection, and enforcement of trademarks. Andrew also maintains an active Patent practice including licensing, technology transfer, and prosecution of patents.

Andrew is a member of the Nashua Bar Association, the International Trademark Association, American Intellectual Property Law Association, the Dartmouth Lawyers Association, the Catholic Lawyers Guild, Northeast Business Alliance, and the American Chemical Society.