Security Interests

Question 1

What is a security interest?

Answer 1

A security interest is an agreement between two parties, usually a creditor (e.g bank or other financial institution) and an IP right owner (e.g of patent, trademark, design etc)

The security interest agreement outlines the terms and conditions under which a creditor will make a loan to an IP right owner in which the IP rights are used as collateral (security)

if TM owner cannot repay loan and defaults, the creditor will take ownership of the trademark registrations and applications used as security

Normally highly confidential

Question 2

Why would you record security interests?

Answer 2

1. Notifies third parties that there is a financial obligation to a creditor which restricts the TM owners rights
2. TM owner cannot usually assign, sell or abandon a TM right which is included in a security interest (must obtain permission from the creditor to make changes which may affect status of applications/registrations included in agreement)

Question 3

What happens if you do not record a security interest?

Answer 3

1. The security interest would not be effective if someone obtained a conflicting right without knowledge of it (therefore creditors usually want to protect themselves by recording security interest on Register as soon as possible)

Question 4

What is the essential information about a security interest that is recorded on the Register?

Answer 4

1. The parties (TM owner/creditor)
2. The grant of security (usually ownership in case of non payment)
3. Fixed charge/floating charge
4. Conversion of floating charge (on non payment)
5. Enforcement of security (on non payment)
6. Schedules (TM Rights)
7. Execution pages (signed by both parties)

Question 5

How to record a security interest at the UK IPO?

Answer 5

Form TM24

Need the TM owner signature (or their representative). If you are representing the creditor w/o signature from TM owner, must attach a copy of the security interest agreement

£50 per form, separate form for each TM owner

Cancellation - TM24C

Question 6

How to cancel a security interest at the UK IPO?

Answer 6

When the loan is repaid a deed of release will be executed

This should be recorded on the TM Register against the TM

Notifies third parties that the financial obligation has ended

Form 24C

Need signature of grantee (creditor)

Question 7

How to record a security interest at WIPO?

Answer 7

Form MM19 (no fee) - not obligatory, could just use a letter

Recordal of security interest at WIPO on the IR governed by national law of the designated country - should seek advice from local counsel

Cancellation in writing - no fixed form

Three parties can present MM19
1. IP owner
2. Patent Office of IP owner (Office of Origin)
3. Other IP office

Requires signature of IR holder/owner or representative

Question 8

How to record a security interest overseas?

Answer 8

Most countries allow for recordal of security interests, but not always called same thing, e.g in USA it is called a pledge

Best to seek advice from local counsel