E-Business 101, Part 4: Security Interests.com - Assets and Patents
(Page 2 of 4 )
The Assets of a Typical Internet Company
While an e-business may have some assets that fit into the traditional categories of plant, equipment and inventory, the majority of the apparent value is likely to be in less traditional assets. Thus, the devil in the details arises when the debt financier seeks to perfect the security interests in the assets of the e-business.
In the case of most e-businesses, the primary assets will be intellectual property consisting of trademarks, trade names, copyrights, patents, customer information and general intangibles. Security interests in intellectual property are generally controlled by the Patent Act, the Copyright Act and the Lanham Act. Also relevant are state laws related to trade secrets, contracts and intellectual property.
Security Interests in Patents
One strategy that has been employed by lenders providing venture capital to e-businesses is to take an assignment of the intellectual property interests, with the lender then licensing the use of the intellectual property back to the e-business. One risk arising from this strategy is that that the Lender may be responsible for registration and maintenance of the intellectual property and enforcement of intellectual property rights against infringers.
An enforceable patent provides the owner a right to prevent others from making, using or selling the patented invention, such as a process, business method, or device, for up to twenty years. A popular means for a creditor to protect its interests in a U.S. patent is by filing a collateral assignment of the patent with the United States Patent and Trademark Office ("PTO") and filing a financing statement under applicable state law. Filing of the financing statement, without a proper filing with the PTO may not protect the secured party from claims of subsequent purchasers.
However, cases can be found that have held that a filing with the PTO is not required to perfect a security interest in a patent, provided that there is a proper filing of a UCC-1.
Next: Trademarks and Copyrights >>
More Website Promotion Articles
More By Myles H. Alderman, Jr.
/ 1 
