April 29 2014 Q&A

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Q1. If collateral is an unregistered copyright, the secured party should file UCC1 in the appropriate state. For registered copyrights, the secured party should file in the copyright office. Both methods of filing only protect the current version at the time of agreement, correct? For example if a secured party filed properly at the copyright office for Software v. 2, the latest version but not v 1, the security interest only reaches the new material added to the subsequent version, and does not extend to either v.3 or the original (probably most valuable)?

A1. Filing in the copyright office only protects the version for which the copyright was filed, not subsequent versions (except to the extent the subsequent version incorporate the older materials). Filing the UCC-1 is not specific to the particular copyright and would apply to all unregistered copyrights.

Q2. Does filing with the copyright office include the right to proceeds from the registered copyright?

A2. Probably not, so it would be prudent to file a UCC-1 also.

Q3. Also, if a lender has a perfected security interest in an unregistered copyright by filing the UCC1, and the copyright is later registered, does the lender need to do anything to maintain priority? What about in situations where the copyright registration is pending?

A3. The copyright registration needs to be accompanied/followed by a copyright mortgage to

Q4. For copyright registration in general, what is the benefit for a software company to register each new version of its software? In my experience working for a software corporation, copyright registrations for new versions never happened. What kind of protection does registering later versions really provide? I'm confused because I experienced a situation where the latest version of a software product was being illegally copied and sold. This was detected by ICE, who requested a copy of the registration for the latest version in order to pursue the infringer. The only registration on file at the copyright office was for a much earlier version, but ICE moved forward with the case using the old registration.

A4. A filed copyright registration is a condition to filing a copyright infringement suit with respect to that registration. However, subsequent version incorporate much of what is in the older version, and use of the subsequent version may still be a sufficient copyright violation of the older version to proceed with the suit.

Q5. In Secured Transactions, we learned that IP is classified as a general intangible, and if copyright, trademarks and patents are used as collateral in a security agreement with the bank, in order to perfect, the bank would file a UCC1 which would encompass all the IP owned by that debtor. Is this wrong? Assuming the copyright is a registered copyright owned by debtor, you would need to file in both places correct?

A5. The UCC-1 has specific provisions that except out from the UCC-1 filing system items which are subject to a different statutory filing system (such as land registration, cars, etc.) and the copyright system is one of those – see UCC 9-109(c)(1) and UCC 9-311(a)(1). So you do need to file in each place.

Q6. There was a question last class re: filing on both the state and federal level. Its my understanding that this is the most effective way to ensure the creditor has rights in the collateral. If on the fed level, each IP right needs a separate filing. So, to be safe you’d want to file at state and fed level (if you wanted to attach the security interest to all of a debtor's IP, or all registered and unregistered copyrights). Please advise if this is incorrect.

A6. Yes.

Q7. In a reseller agreement, if a vendor agrees that:

(I) the same or similar merchandise is not being and will not be offered to any other purchaser at a lesser cost or under more favorable terms than appear herein

Is this not like the Apple case because these agreements include language that the reseller sets the retail price?

A7. It is a possible issue. The Apple case turned on an explicit conspiracy, and it is not clear to me from the language you cited that this provision alone would support the same conclusions, but it is troubling.

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