Leveraging knowledge assets : Reducing uncertainty for security interests in intellectual property

Examples include the creation of the corporate personality as a means of limiting liability, the invention of mechanisms to leverage the value of “movables” such as cars and shares, the facilitation of trade through credit instruments, and the development of franchising and condo- minium law. [...] Part 5: Choice of Law Approach The reforms recommended in Part 4 would improve the ability of prospective secured creditors to investigate a prospective debtor’s legal title to the collateral, thus reducing one important source of the legal uncertainty identified in Part 3. But further reforms are needed to address the uncertainties in the priority of claims to the same federal IPR, both as betwee [...] Under the choice of law approach, the federal government would recognize the law of the debtor’s location as the legal regime applic- able to the registration, the effects of registration or non-registration, and the priority of security granted in any federal IPR. [...] One of the features of the choice of law approach is that it invokes more than one legal system: the law of the debtor’s location applies to the registration and priority status of security rights, while deter- minations relating to ownership and assignment of the IPRs are sub- ject to federal law. [...] The basic idea is simple: security gives a creditor the right, should the debtor default, to claim repayment out of the value of the assets that the debtor previously agreed would be charged with security.1 A secured creditor has a priority advantage and an enforcement advantage.2 The priority advantage inheres in the secured creditor’s right to follow the charged assets into whoever’s hands they