Welcome back to the world of Secured Transactions and IP! A quick refresher from last week (link last week’s post?): lenders engage in “secured transactions” with a borrower who has put up collateral against that loan which has become enforceable. The lender can possess and sell that collateral if the borrower defaults should that lender have the highest priority on the collateral. The question we left off with last week was how to properly establish that highest priority, primarily through filing a financing statement—how, why, and where? And should you ever file with multiple offices? As with many questions in the law…it depends!
Generally, you file a security interest with the appropriate state office to perfect your interest—most states use the Secretary of State, but Wisconsin likes to change it up and requires filing with the Department of Financial Institutions instead. This filing operates under the Uniform Commercial Code, which you may remember from last week’s post, but in some cases, other existing federal laws complicate the process. For a trademark (as well as a patent), filing with the state will perfect your interest, giving you first priority to possess and sell the interest in that trademark should the borrower default. Even though that seems fairly straightforward, the issue does not end there.
A further complication arises when a lender wants to protect their interest in this trademark against a “future bona fide purchaser for value”, as in another person the borrower/owner of the trademark might try to sell their trademark to regardless of the lender’s security interest in it. In order for a lender to be protected in that case, they’d need to make an additional, different filing—this time, to the US Patent and Trademark Office (USPTO). The difference in location for the filing for these different purposes is because different laws control these different actions.
If you were curious about copyrights, it’s a slightly different story. Registered copyrights are perfected by filing with the copyright office, not the state; however, unregistered copyrights should be filed with the state to perfect. Your friendly neighborhood IP lawyer does recommend registering copyrights in general, but that’s another blog post. I hope you have enjoyed reading this double dose of bloggin on security interests in IP.Thank you for reading!