Software Copyrights as Loan Collateral: Evaluating the Reform Proposals

Authors

Patrick R. Barry

Abstract

Software companies rely heavily on intellectual property, particularly copyrights, for loan collateral. For many young firms, copyrights represent their only valuable asset. Two sources of law, the Copyright Act and the Uniform Commercial Code (U.C.C.), both address the perfection of security interests in such collateral. Until recently, lenders frequently filed under both systems to ensure perfection of security interests in copyrights and copyright-related receivables. In In re Peregrine, a federal judge sought to end the uncertainty by holding that the Copyright Act preempts the U.C.C. in such perfection situations.

In his Note, the author summarizes existing criticisms of the Peregrine decision and, finding them unpersuasive, turns to proposed legislative solutions. After evaluating the benefits and drawbacks of three reform proposals, he concludes that the Copyright Act should be amended to allow state law to govern the perfection of security interests in copyrights.

Recommended Citation

Patrick R. Barry, Software Copyrights as Loan Collateral: Evaluating the Reform Proposals, 46 Hastings L.J. 581 (1995).
Available at: https://repository.uclawsf.edu/hastings_law_journal/vol46/iss2/5