Banking on IP rights: are these the right principles?

Readers of this weblog will be well aware of the troubled history of UNCITRAL's efforts to conclude a Legislative Guide on Secured Financing -- which would be the basis for national legislation in all UNCITRAL members -- without taking into account the special position of intellectual property rights (see eg the IPKat weblog here and here). Now, following many discussions within the IP community and between the IP community and UNCITRAL, the following five principles are being considered as the basis for an Intellectual Property Annex to the UNCITRAL Legislative Guide on Secured Financing (the “Guide”). They read as follows:

"Principle 1. “Intellectual property” means all rights and interests included within the term under applicable national intellectual property law and international conventions, including the Agreement on Trade-Related Aspects of Intellectual Property (“TRIPs”). In case of any inconsistency between intellectual property law and the Guide, intellectual property law prevails to the extent of the inconsistency.

Principle 2. A secured creditor that obtains a “security right” on intellectual property under the Guide does not by so doing become a “right holder” with respect to the encumbered intellectual property. The term “right holder” should be interpreted consistently with TRIPs Art. 42.

Principle 3. A secured creditor under the Guide can obtain no greater rights in encumbered intellectual property than the actual interest of the grantor of the security right in the intellectual property. The grantor’s interest in encumbered intellectual property is subject to all enforceable terms and conditions regarding use of the intellectual property to which the grantor is subject consistent with applicable intellectual property law.

Principle 4. A security right under the Guide is not effective against any assignment, licence or transfer by succession of any encumbered intellectual property whether such assignment, licence or transfer by succession is made before or after the security right is granted.

Principle 5. States should continue to use their existing method of financing of intellectual property by a conditional assignment, mortgage, fixed charge, fixed pledge or other comparable device, which should be considered separate from, and take precedence over, a security right in encumbered intellectual property as provided in the Guide.

Says the IPKat, if you have any comments concerning the significance, relevance or validity of these five principles, can you please email them as a matter of extreme urgency to one or all of the following: Cristina Duch (MARQUES), Ben Goodger (Rouse) and Lorin Brennan (Gray Matter) -- or post your comment below.