Further news from UNCITRAL

Further news from UNCITRAL

After Thursday's UNCITRAL Colloquium discussions (see the IPKat's note here) it became quite apparent that there were many IP practitioners in attendance who had misgivings about the impact of the draft Legislative Guide on Secured Transactions upon IP rights. After that day's discussions a group of interested attendees got together to focus closely on the issues in terms of chapter-and-verse and to demonstrate why indeed the draft Guide - which is on the whole a remarkable achievement in itself - raises so many anxieties within the IP community. This group has now drafted the following text:

ILLUSTRATIVE LIST OF ISSUES FOR DRAFT GUIDE

The following lists certain issues raised by IP professionals regarding areas in the draft UNCITRAL Legislative Guide that should be considered for IP. This list is not exhaustive but merely illustrative of areas in the draft Guide that need clarification for IP assets.

1. Article 3(a) &(d) (and implementing provisions): Clarify that standard IP assignments and licenses are not "retention of title" devices that become "security rights" (absent express intent). E.g. any license of IP, or a copyright assignment with right to cancel for nonpayment of royalties, is not per se a "security right."

2. Article 3(p) (and implementing provisions): Clarify that IP licenses with contractual performance terms are not "receivables" and hence treated separately from normallP rules.

3. Article 3(ii) (and implementing provisions): Amend the definition of "intellectual property right" to be consistent with established IP treaties and laws, e.g. TRIPS. Such definition should extend to assignments, exclusive licenses and non-exclusive licenses; it should also include IP royalties, rights of remuneration and compulsory license fees to ensure that the priority systems for dealing with all types of IP interest are consistent.

4. Article 3(ww): Amend "licensee in the ordinary course" to exclude IP. This hurts IP owners and lenders since (a) the licensees will get apparently valid licenses even if this contravenes prior secured rights of the lender; and (b) as a result lenders may be discouraged from lending to IP owners because they may use this loophole to make improvident licenses.

5. Future assignments: Recommendation 22(a) allowing omnibus future assignments should be clarified that such assignments are subject to standard owner protections in IP law.

6. Anti-assignment provisions: Recommendations 23(a) and 24(a) are hard to interpret in the context of standard IP practices. Recommendation 23(a) should be reconsidered in light of contrary policies for IP. (Recommendation 6 is not sufficient for this purpose). Recommendation 24(a) should be clarified that an authorized assignment of royalties does not ipso facto transfer IP rights.

7. Sections VI & VII: Due to the practical issues of searching and priority, both security rights and ownership transfers of IP should be filed in specific IP filing systems where they exist (e.g. Patent Law Treaty, CTM regulation). Further study is needed on the Guide proposals as they relate to IP, along with possible piracy impacts. It also is necessary to study what benefit there is in filing security rights in systems that do not use registries (e.g., German copyright) in light of costs involved.

8. Recommendation 197: This approach is overly simplistic for intellectual property licensing structures due, for example, to numerous competing creditors in the chain of title and multiple owners in different countries, making it difficult to identify the "location" of a debtor. Utilize existing IP priority rules (which have already addressed these issues).

9. Clarify that a security right over goods that embody IP does not create a security right over the IP and vice verse (e.g. software disc).

10. Recommendation 143: Clarify that where a lender enforces its security right in goods that embody IP: lender must comply with all license terms before exhaustion; after exhaustion, lender may dispose of goods but only to the extent of the rights exhausted. Clarify that the Guide expressly takes no position on international exhaustion.

The IPKat is pleased that UNCITRAL remains open to further comments and suggestions and hopes that the serious and responsibly-articulated concerns of IP creators, owners and licensees will be taken fully into account. Meanwhile, if any reader has any further points that they should like to add to this list, or requires any clarification as to their significance, they should contact Lorin Brennan or Ben Goodger and let them know.

Helpful note on gaining access to UNCITRAL documents here