1. UNCITRAL United Nations Commission on International Trade Law Security interests in intellectual property Spiros V. Bazinas Senior Legal Officer UNCITRAL Secretariat

2. UNCITRAL United Nations Commission on International Trade Law Outline 1.Purpose of work 2.1.Scope of work: assets and transactions covered 2.2.Scope of work: the relationship between IP and ST law 3. Creation and third-party effectiveness 4.Priority, enforcement and applicable law issues 5.1Insolvency of the licensor 5.2Insolvency of the licensee 6.Conclusions

3. UNCITRAL United Nations Commission on International Trade Law 1.Purpose of work Economic development depends, to a large extent, on innovation. Innovation requires funding, but is subject to IP law. The main purpose of UNCITRALs work is to facilitate intellectual property (IP) financing within the parameters of IP law. –Allow authors, inventors and lesser rights holders to use their IP rights as security for credit, to the extent permitted under IP law –Allow secured creditors to obtain a security interest (SI) in an IP right, determine its priority and enforce it within the limits of IP law.

4. UNCITRAL United Nations Commission on International Trade Law 2.1.Scope of work: assets and transactions covered The characterization of IP rights and whether they may be encumbered is a matter of IP law. Within these limits, the Guide and the IP Annex are based on the assumption that a SI may be created in a patent, trademark or the economic rights under a copyright, the rights of a licensor or the rights of a licensee. Transactions covered include all transactions that serve security purposes, no matter how they are denominated (pledges, mortgages, trusts, security transfers, etc.). Outright transfers of IP rights are not covered, except that when they compete with a SI in an IP right, the Guide and the Annex set out priority rules.

5. UNCITRAL United Nations Commission on International Trade Law 2.2.Scope of work: The relationship between IP and ST law In principle, ST law (the LG) covers SIs in IP rights. However, if ST and IP law apply to the same matter and lead to a different result, IP law prevails, provided that the IP law rule is IP specific, i.e. it applies only to Sis in IP rights and not to SIs in other assets. There is no overlap and thus no conflict with respect to the creation, effectiveness, priority and protection of an IP right itself, but only with respect to the creation, third-party effectiveness, priority and enforcement of an SI in an IP right. Relationship between the Guide and the IP Annex: the general discussion and recommendations apply to Sis in IP rights, as supplemented or revised by the IP-specific discussion and recommendations.

6. UNCITRAL United Nations Commission on International Trade Law 3.Creation andthird-party effectiveness Creation of an IP right (matter of IP law) –IP right (patent and trademark): registration of document or other act –IP right (copyright): automatic creation of the copyright upon creation of the protected work Creation of an SI in an IP right (matter of ST law) –Security agreement Third-party effectiveness of an IP right (matter of IP law) –Often, automatic third-party effectiveness upon creation of an IP right Third-party effectiveness of an SI in an IP right (matter of ST law) –Registration of notice –Coordination of registries (document v. notice filing, asset-based index v. debtor-based index and creation, declaratory or evidentiary effects v. third-party effects

7. UNCITRAL United Nations Commission on International Trade Law 4.Priority, enforcement and applicable law issues Priority of an IP right (matter of IP law) –First in time of transfer –Absence of knowledge of a prior transfer Priority of an SI in an IP right (matter of ST law) –First in time of registration –Ordinary-course-of-business non exclusive licensees Enforcement of an IP right (matter of IP law) –Enjoy use and benefits of IP right –Protection against infringers Enforcement of an SI in an IP right (matter of ST law) –Tangible assets including IP rights: repossession and sale of the assets –IP rights: sale or licence of an IP right Applicable law issues –Contractual matters: the law chosen by the parties –Proprietary matters: the law of the country in which protection is sought v. the law of the debtors country

8. UNCITRAL United Nations Commission on International Trade Law 5.1Insolvency of the licensor Licensor Licensee Sub. 1 Sub. 2 Sublicence 1 Sublicence 2 Loan B 1 SI in Subroyalties 1 Subroyalties 1 Loan SI in Subroyalties 2 B 3 Subroyalties 2 LicenceRoyalties Insolvency Loan SI in Royalties B 2

9. UNCITRAL United Nations Commission on International Trade Law Licensor Licensee Sub. 1 Sub. 2 Sublicence 1 Sublicence 2 Loan B 1 SI in Subroyalties 1 Subroyalties 1 Loan SI in Subroyalties 2 B 3 Subroyalties 2 Licence Royalties Insolvency 5.2Insolvency of the licensee Loan SI in Subroyalties 1 B 2

10. UNCITRAL United Nations Commission on International Trade Law 6.Conclusions WG VI has reached agreement on a number of issues to be addressed by new commentary or recommendations. WG VI still needs to reach agreement on a number of other issues: –Coordination of registries –Priority issues (ordinary-course of business non-exclusive licences) –Insolvency-related issues –Applicable law issues WG V and WG VI cooperate to resolve issues relating to the coordination of IP, ST and insolvency law. Schedule of meetings: –Next WG VI meeting: NY, 27 April to 1 May 2009 –Estimated completion of the Annex: at the 42 nd session of the Commission in 2010 (Vienna, 21 June-9 July 2010).