Pledge Of Intellectual Property Rights
Introduction of the new way of disposition of rights to Articles 1232, 1233 of Civil Code – which is called a pledge of intellectual property, is worth mentioning among the innovations in the sphere of intellectual property rights of the recent years.
As a general matter, the pledge obligation itself is not a fundamental, but supplementary (accessory) in relation to the fundamental one. The objective of the creditor in primary obligation is not to infringe his interests in case of default on obligations of a debtor. Delay in return of the sum of credit or loan, non-delivery of the paid product by the contracting party within the stipulated period of time, failure of contracting party to present the results of work according to agreements of contract type – all of these may heavily complicate financial situation of the creditor. The pledge, which is assigned to “the ways of obligations securing” is called to grant the creditor additional assurance of his rights and legitimate interests, whereas it means that the creditor (pledge holder) has the right to get reparation from the cost of the pledged property. Such satisfaction is provided by the enforcement of the pledged property and its realization, paying the proceeds or (under certain circumstances) transferring the object of pledge itself to the aggrieved creditor.
Basic “commercial” rights of intellectual property, among which exclusive power occupies the central place, are directly referred to property by applicable law. According to general rule, the same legal regime is applied to such properties (in the aspect of their pledge), as well as to the objects of proprietary interest. For example, enforcement for exclusive right either in judicial procedure or extrajudicially, if extrajudicial procedure is provided by written agreement of the bail bond parties. As well as in situation with the interest in the object, the demands of creditors under commitments, provided by exclusive right pledge, possessed by liquidated juridical person, are satisfied at the expenses, received from selling of subject of a pledge, - mainly owed to other creditors excluding liabilities to the first and second ranking creditors, rights claim to which appeared before the execution of the corresponding pledge contract. According to the general rule pledge of exclusive right, as well as pledge of an item of property, provides the demand to the extent which it possess by the moment of satisfaction, percent, penalty, compensation of losses due to delay in performance in particular, and compensation of the necessary expenses for safe custody of the subject of a pledge and on debt collection expenses of the pledge holder. Other analogous factors, which bring together pledge of exclusive right and pledge of property, and which are caused by the application to tangible objects pledge as well as to intellectual rights pledge take place – these are general provisions of the Civil Code and the Law “On Pledges”.
However, it should be understood that the "intellectual rights" – are a special kind of property, the nature of which is largely determined by non-material component and the personality of the author (holder of rights). Therefore at appearance, realization and completion of pledge legal relationship, the following range of vital peculiarities is found:
- intellectual rights can be the subject to property only if their alienation or enforcement is allowed by law (for example,: personal non-property rights of authors and other holders of rights, exclusive rights to firm name, name of origin of goods, proprietary “resale royalty right” cannot be alienated and consequently, cannot be pledged) and exclusive right of performer in his performance or exclusive right in secret invention cannot be enforced, therefore their full-rate pledge is hardly possible according to the law (although Administrative provision of the Russian Agency for Patents and Trademarks does not exclude it for secret inventions);
- in some cases established by the law, contract of exclusive rights pledge is subject to compulsory official registration and is not valid without such registration (concerning pledge of exclusive rights to inventions, useful models, industrial samples, logotypes); corresponding state agency – mainly Russian Agency for Patents and Trademarks shall be involved during enforcement of such objects, with the aim of recording of the fact of transfer of right to the new holder of right (creditor);
- subject matter of exclusive right pledge contract shall contain regulations for the corresponding object of intellectual property, and in certain cases – even for number and date of issuing of the entitling document (patent, certificate);
- The contract may provide exclusive right pledge in general as well as the right to use the object of intellectual property (in the latter case it is essential to observe the regulations of the law concerning execution of license contracts);
- regulations for exclusive right pledge provide the pledger with the possibility to make free use and dispose of the subject of pledge without the consent of the pledge holder, except as otherwise provided herein by the contracting parties (general rule of Part I of the Civil Code contains the reverse rule).
The check whether the given object of intellectual property is not alienated to pledge of right, is an important factor when acquiring the rights. Presence of such alienation may heavily affect the investment decision. Besides, presence of pledge alienation may affect the cost of the exclusive right or the license.
Accordingly, contract of pledge of intellectual property rights has a range of peculiarities, which are to be taken into consideration when settling the transaction.
