"The Guide and the Supplement are designed to facilitate intellectual property financing, without interfering with intellectual property law. This result is achieved by commentary and recommendations that deal with the creation, third-party effectiveness, priority, enforcement (even within insolvency) of a security interest in an intellectual property right, and the law applicable to such matters.
The commentary of the Supplement explains how the recommendations of the Guide and the Supplement would apply in the context of an intellectual property financing transaction. They do so in a way that ensures better coordination between secured transactions and intellectual
property law. With the same goal in mind, the recommendations of the Supplement modify the general recommendations of the Guide as they apply to security interests in intellectual property
The Supplement is intended to provide guidance to States as to issues relating to security interests in intellectual property rights. It is not intended to deal with purely intellectual property law issues. However, it includes mild suggestions as to how States that may wish to enact the recommendations of the Guide and the Supplement could coordinate their intellectual property laws with their enactment of the recommendations of the Guide and the Supplement.
The integrity of intellectual property law is preserved through a general rule that gives precedence to intellectual property law where it deals in an asset-specific and different way with a matter addressed in the Guide and the Supplement.
The creation of a security interest in an intellectual property right is simplified by requiring only a written security agreement. At the same time, the rights of third parties are protected by third-party effectiveness requirements that refer to the registration of a notice of a security interest in an intellectual property right in the general security interests registry (or, if there is a specialized intellectual property registry, in that registry).
Similarly, the interests of competing claimants are protected by a set of rules according to which priority among competing claimants is to be determined on the basis of the time of registration of a notice of the security interest in the general security interest registry, with appropriate exceptions (for example, giving priority to a security interest registered in an Intellectual property registry over a security interest registered in the general security interest registry).
A comprehensive set of enforcement provisions in the Guide and the Supplement is designed to ensure certainty as to the remedies of the secured creditor in the case of default with due protection of the rights of the grantor and other parties with interests in the encumbered intellectual property, and with due recognition being given to the basic principles of intellectual property law.
Discussion of applicable law issues completes the treatment of security interests in intellectual property rights in the Guide and the Supplement in a practical way that is consistent with intellectual property law. The recommendation adopted breaks new ground and should enhance
certainty of the law applicable to security interests in intellectual property rights and thus facilitate intellectual property financing.
Finally, the discussion of insolvency-related issues is intended to supplement the regime of security interests in intellectual property with an analysis of the impact of the licensor's or licensee's insolvency on a security right in that party's rights under a licence agreement. It can be reasonably expected that the Guide will become a common reference tool in all secured transactions reform efforts. The reference to the Guide in the Australian and South Korean secured transactions law reform initiatives, as well as the use of the Guide in the Draft Common Frame of Reference and in World Bank secured transaction law reform documents justify such an expectation.
The expectation of the Supplement can be no less, in particular, as it is the first text of its kind that deals with the issues at the intersection of secured transactions, insolvency, conflict-of-laws and intellectual property law, and cuts in an Alexandrian way many Gordian knots in that respect or even breaks new ground with rules that attracted a great deal of consensus among experts who initially were not of one mind".Meanwhile, preparations for next week's Commission session (Vienna, 27 June to 8 July 2011) are going well. You can find the provisional agenda (A/CN.9/711) is here. This blog is indebted to Spiros for letting us know that
"On security interests, we have just a brief report on the progress of WG VI and on the coordination with: (i) the security interests texts of Unidroit and the Hague Conference; (ii) the WB in preparing a joint UNCITRAL/WB set of standards on ST; and (iii) the EU Commission on the law applicable to the proprietary effects of assignments (the BIICL is preparing a study). Security interests will probably be discussed between 4 and 6 July".Long-standing readers of this weblog will recall that it was UNCITRAL's first efforts regarding the IP-security interests zone of interest which triggered its being founded in January 2008. The blog and UNCITRAL have both grown through the experience which, initially filled with friction, suspicion and misunderstanding, has brought a good deal of benefit to both the IP and the finance communities. Thank you, Spiros and UNCITRAL, for taking our comments, and our commitment, so seriously.