The economy has not been kind to many businesses in the last several years. In trying to obtain credit to keep afloat, many businesses have had to secure their loans with not only their tangible assets, but also their intangible intellectual property assets. In order to secure their places in line in the event of bankruptcy or a default on a loan, banks, venture capitalists, and other lenders must perfect their security interests in all of the borrower’s assets, including trademarks, copyrights, and patents. However, the proper methods for doing this are not as straightforward as they might seem to be.
The Uniform Commercial Code (UCC) is a set of uniform laws enacted in all 50 states governing the conduct of business and also proscribing procedures for making the appropriate filings to perfect security interests in certain tangible and intangible assets. A security interest in most types of personal property is “perfected” by providing public notice of the interest through filing a UCC-1 Financing Statement with the Secretary of State’s Office in the borrower’s jurisdiction of organization.
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