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Establishing your security interest in intellectual property

On Behalf of | Sep 29, 2021 | Intellectual Property

Security interests may sound complicated. But they’re actually quite simple. If you have a security interest in intellectual property, that means you have a legal claim or lien upon it. You might receive a security interest in exchange for providing a loan to the IP holder. The security interest protects you, should the IP holder be unable to pay you back. It’s important for business owners in Texas to understand intellectual property law. That includes knowing how to perfect a security interest in IP.

What exactly is perfecting an interest?

Perfecting a security interest in intellectual property essentially means that you are recording it. You’re making it so everyone knows, or can find out, that you have a legitimate interest in the IP. This protects you in the case that you’re not paid back per the agreement you executed.

The way this is done depends on the type of IP you’ve acquired an interest in. For trademarked property, the relevant law is the Lanham Act. Under this law, you must file paperwork known as a UCC-1 in the home state of the trademark’s owner. Other types of intellectual property work differently, though.

Copyright, for example, is governed at the federal level. This means that if the IP holder registered copyright, you must file the agreement you’ve executed with the Copyright Office. However, for copyrights that were never officially registered, a UCC-1 should suffice. It’s a good idea to list all copyrights in the UCC-1, whether or not you are also filing with the Copyright Office.

Holding security interests in intellectual property is an important way for lenders to protect themselves. Knowing you can call upon that interest makes investing much feel much safer. Understanding how to perfect a security interest in IP is crucial for investors and lenders who want to make it big in Texas’ business environment.