Pub. 6 2011-2012 Issue 6

www.nebankers.org 22 Extraordinary Service for Extraordinary Members. Q Tangible Problems — continued Copyrights Copyrights may be registered or unregistered. Registered copyrights are governed by the Copyright Act, 17 U.S.C. § 205. Unlike the Patent Act and the Lanham Act, the Copyright Act provides a federal perfection scheme at Section 205. Section 101 defines transfer of copyright ownership as an assignment, mortgage, exclusive license, or any other conveyance, or alienation of a copyright. The Copyright Act, therefore, specifically preempts the UCC. In re World Auxiliary Power Co. , 303 F.3d 1120 (9th Cir. 2002) (the Copyright Act’s use of the word “mort- gage” as one definition of a “transfer” includes security interests under the UCC). Courts reject the proposition that federally registered copyrights are properly perfected under the UCC. In re Peregrine Entertainment, Ltd. , 116 B.R. 194 (C.D. Cal. 1990); In re AEG Acquisition Corp. , 127 B.R. 34 (C.D. Cal. 1991), aff’d 161 B.R. 50 (9th Cir. 1993) (federal filing is the exclusive method of perfection for federally registered copyrights). Accordingly, to properly perfect a security interest in a registered copyright, a filing must be made with the Copyright Office. Problems arise, however, in the case of unregistered copyrights, as many se- curity agreements include as collateral all of the borrower’s unregistered copy- rights. Under copyright law, copyrights exist automatically upon creation of the work whether or not registered with the Copyright Office. For unregistered copyrights, no record of the copyright is with the Copyright Office and, therefore, it is not possible to file a security interest with that office. Some courts have held that a lender’s security interest in an unregistered copyright is perfected pursuant to a filing under the UCC. World Auxiliary Power , 303 F.3d at 1128. Other courts have held that the perfection of an unregistered copyright is only proper with the Copyright Office and, thus, a necessary prerequisite to perfecting a security interest in an unregistered copyright is to register the copyright. AEGAcquisition Corp. , 127 B.R. 34 and In re Avalon Software, Inc. , 209 B.R. 517 (D. Ariz. 1997). In the case of an unregistered copy- right, a prudent commercial lender is advised to record with the UCC and simultaneously register the copyright and record with the Copyright Office. In some cases, however, it may not be practicable to register the copyright, for example where the copyright per- tains to software which is likely to be revised frequently. In such cases, a lender may choose to file solely under the UCC andmonitor (by means of cov- enants and other policing mechanisms in the loan documents 1 ) whether the unregistered copyright becomes regis- tered and to then take appropriate ac- tion in the Copyright Office to perfect. Did you know that a child with a college savings account is seven times more likely to attend college than one without? Teach Children to Save Day is an ideal opportunity to start children in your community on the path to sound money management and a productive adulthood. On April 24, 2012 , join with bankers across the nation to help shape the future of young people in your community. Your participation will inspire them to reach for their dreams—and enhance your bank’s image. To learn more and to register, visit aba.com/Teach . Their Dreams Teach Children to Save Day April 24, 2012 Start with You ABA Education Foundation