Abstract
This paper is based on a taxonomy of categories of security rights over IP, depending first on whether or not the IP right is registered and second on whether the transaction creating the collateral is asset-centric or debtor-centric. After discussing the questions raised by reconciling the security function with the non-rival nature of IPRs, the essay deals in some detail with the question whether security over IP follows the pattern of a pledge or of a mortgage; subsequently, it follows the ramifications of these alternatives for the major open issues in the area. The section focusing on the structure of the transaction intends to clarify the separate phases of the security’s creation, attachment, and perfection. The paper ends by looking at enforcement and bankruptcy.
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Notes
- 1.
The implementing regulations for a) to c) can be found in Decree No. 33 of 2010 and those for d) in Decree No. 1936 of 1942.
- 2.
- 3.
- 4.
Art. 140 of the IIPC reads:
Security Rights
-
(1)
Security rights over industrial property rights may be created only as collateral for money credits.
-
(2)
In the event that multiple security rights are granted on the same IndPR, priority is established based on the order of the registrations.
-
(3)
The cancellation of the registration of security rights over intellectual property rights is effected on the basis of the filing of a deed of consent bearing the creditor’s certified signature; a court decision ordering cancellation, once this has become final and binding; or proof that the right for which security was given has been fully satisfied as a result of enforcement.
-
(4)
The same fee due for registration is also due for cancellation. [My translation.]
-
(1)
- 5.
I use here the term “mortgage” rather than “hypothec” because the former term, while less accurate, is more current than the latter.
- 6.
- 7.
- 8.
Brennan (2009), pp. 17 et seq. Credits may also be pledged without the necessity of a transfer of possession to the secured creditor by resorting to the equivalent device of a requirement of notice to the third-party debtor. Similarly, shares in private corporations and in partnerships are not represented by a document; however, it is generally held that this fact does not prevent them from being pledged, at least to the extent that proof of possession of the corresponding position within the corporation or partnership can be reliably given. See in connection with this Revigliono (1998), pp. 300 ff.; Desana (2014), pp. 71 et seq.
- 9.
See Spolidoro (2010), pp. 45, 46.
- 10.
Spolidoro (2010), p. 45. This view is subject to the counterargument that the transfer of possession is a normal but not a necessary feature of the pledge and that it may be replaced by notice in the case of credits and by registration in the case of IndPRs. The counterargument continues by remarking that even when the secured transaction is categorized as a pledge, there are good reasons to assume that the management of the IP asset remains in the hands of the debtor (see Sect. 3.1(vii)).
- 11.
It is also argued that, to provide legal certainty, the registration of the transaction in the appropriate IP register is required for the creation of the security as well, and not just for its perfection; this feature, again, is held to be characteristic of a mortgage but not of a pledge by Spolidoro (2010), p. 46 (however, for the opposite view, according to which creation or attachment requires registration in connection with a pledge as well, see Sect. 3.1(iv)).
- 12.
- 13.
See Sect. 2.1.
- 14.
Among the reported cases see Trib. Rome November 26, 2008, Settimaluna s.r.l. v Italian International Film s.r.l., in AIDA 1347 case “La paura degli Angeli” with annotation by A. T[osato] and Trib. Rome September 16, 2008, Merrill Lynch Capital Markets Bank Ltd. v Fall to Mediafiction, in AIDA 1303, case “Mediafiction”, which both concerned securities over motion pictures.
- 15.
- 16.
See Sect. 3.1 (vii).
- 17.
On this provision, which is the successor to Royal Decree No. 1061 of 1938, see Tosato (2009), pp. 560 et seq., 585 et seq.; Maggiolo (2009), pp. 148 et seq.; Auteri (2009), pp. 135–136 and 139; Nivarra (1994), pp. 117 et seq. Also the legislative decree No 518 of 1992 provides for the registration in a special register of computer programs and dealings in them, but falls short of making the corresponding filings effective against third parties; the same applies to the general register established by Art. 104 ICL, which is optional and does not have effects other than providing proof of the date of the registration itself (see Auteri 2009, p. 135).
- 18.
Nivarra (1994), pp. 129 et seq.
- 19.
Brennan (2009), pp. 17 et seq., describes these approaches as title-based devices (as opposed to possession-based devices) for establishing secured financing. In Germany, where the grant of a mortgage entails a voluntary transfer of the asset (Brennan 2009, p. 19), the collateral usually takes the form of a mortgage.
- 20.
The secured transaction based on a transfer was found invalid by Trib. Rome of September 16, 2008, case “Mediafiction,” quoted above at note 14. A sale/lease-back transaction has, however, been held valid by Cass. July 21, 2004, No. 13580, Banca Agrileasing s.p.a v N.I. s.r.l., in Studium iuris 2004, II, 1581 ff., to the extent that the effective purpose of the transaction could be identified as enabling the leasing of the asset, rather than as creating a security. See also Cass. January 28, 2015, No. 1625, Unicredit Leasing s.p.a. v Fallimento Morettoni s.p.a., in Giur. It. 2015, 2341 ff., recognizing the validity of transactions whereby a clause (the so-called “patto marciano”) provides that any excess in the value of the asset compared to the debt is handed over to the debtor. The prohibition contained in Art. 2744 ICC is no longer absolute, however: see Art. 48-bis of the Consolidated Text of Banking and Credit Laws, adopted by Legislative Decree No. 385 of 1993, as amended by Law No. 119 of 2016.
- 21.
- 22.
Insofar as the same rights do not still personally belong to the creator: this proviso clearly has the “paternalistic” aim of protecting the creator from unconsidered dealings in her works (see Fabiani 1958); as such, it does not apply when the copyright has already been assigned or otherwise transferred to a person or entity other than the creator.
- 23.
In this connection see also the recent work by Mezzanotte (2015), pp. 245 et seq.
- 24.
- 25.
- 26.
- 27.
- 28.
- 29.
With notarized signature: Tucci (2003), p. 668.
- 30.
For elucidation, see Tucci (2003), p. 674.
- 31.
However, as the original trademark or patent application may be subdivided at a later stage (under Artt. 158 and 161 IIPC, respectively), the question arises whether the security that was originally given on a single right will expand upon the final grant of multiple rights. The answer is likely to be in the affirmative, as the grant does not encompass any subject matter which was not included in the original filing. However, there does not seem to be any precedent for this conclusion, which is unsurprising as the point is indeed very specific.
- 32.
- 33.
An express stipulation to this effect may be required, however, for the reasons detailed in Sect. 3.1.7.
- 34.
For the separate question whether the owner of an IP right may license it after having granted a security over it, see Sect. 3.1.7.
- 35.
Mezzanotte (2014), pp. 1169–1170.
- 36.
By Mezzanotte (2014), pp. 1186–1187.
- 37.
See Sect. 3.1.4.
- 38.
- 39.
Piepoli (2009), p. 638.
- 40.
In connection with TM law, see Ricolfi (2015), pp. 1651, 1671.
- 41.
On the relationship between Artt. 2742 and 1186 ICC, see Galgano (2015), p. 359.
- 42.
However, it has been noted that a specific provision concerning goods and services given as security for a loan (Art. 1849 ICC) points in the opposite direction: see Galgano (2015), p. 364.
- 43.
Galgano (2015), p. 363.
- 44.
Quaere what the position is of non-exclusive licensees, whose licences in accordance with the prevailing view cannot be registered.
- 45.
As admitted, but only for argument’s sake, by Auteri (2009), p. 138.
- 46.
See Spolidoro (2010), p. 46.
- 47.
See, however, the (unpublished) judgment by Trib. Torino October 15, 2013, Esseci s.r.l. v Stoner s.n.c., Gilardino Carlo, Sawing Lda., caso “Gems”, which—admittedly in a matter different from the creation and perfection of securities—considers that the subsequent purchaser who is an earlier registrant prevails over the first purchaser who failed to register, by applying Art. 139 IIPC as though this provision contains the same general rule as Art. 2643 ff. ICC, which concern the registration of real estate transactions. The decision clearly states that the validity of the first sale does not prevent the first registrant from prevailing, thereby overriding the nemo dat rule.
- 48.
For a—not unsympathetic, but then also not wholly convincing—account of this argument, see Auteri (2009), pp. 137–138 with further references.
- 49.
See, for instance, Gazzoni (2001), p. 651.
- 50.
- 51.
It should be noted that, conversely, under sec. 3 of Art. 140 IIPC, the security is still in place even when the creditor has agreed to its release; the release has been ordered by a final and binding decision; or the debt has been extinguished via enforcement proceedings, until cancellation from the register has occurred in actual practice. Understandably, Spolidoro (2010), p. 46 sees this provision as a confirmation of the reading referred to in the text above: indeed, here the final effect depends on the filing in the register rather than on the preliminaries to this filing.
It is worth mentioning that this approach is contradicted by provisions such as Art. 27(1) and (2) EUTMR, which state that even without registration, a transaction may be effective against third parties who acquired their right subsequently and who have knowledge of the prior transaction and in the case of a transfer of business (see Ricolfi 2015, p. 1577). This contradiction may also have an impact on national rules, as in the long run, case law tends to adapt national solution to EU principles. On a different note, it may be interesting to see which rules are applied when the transaction concerns an entity which is protected by a registered IndPR and an unregistered IPR at the same time. For an example, see the Vespa case (Trib. Torino April 6, 2017, Zhejiang Zhongneng Industry Group e Taizhou Zhongneng Import and Export Co. v Piaggio s.p.a., caso “Vespa”), where the same vehicle was deemed to be protected under both trademark and copyright law.
- 52.
Mezzanotte (2014), pp. 1186–1187 and 1181.
- 53.
Artt. 138, sec. 3 and 196, sec. 1. For deeds formed abroad, the legalization takes place in accordance with the apostille procedure pursuant to the Hague Convention of October 5, 1961. No legalization is required for those countries (such as Germany) where a bilateral convention with Italy on the recognition of notarized certification is in place.
- 54.
Art. 148, sec. 5 IIPC; Art. 40 of the implementing regulation of the IIPC, Ministerial Decree No. 33 of 2010. Art. 40, sec. 5 of the same implementing regulation also requires that a copy of the foreign deed be deposited with an Italian notary or in an Italian notarial archive.
- 55.
See Sect. 2.1.
- 56.
Which, as noted in Sect. 2.1, may replace the transfer of possession.
- 57.
Art. 1186 ICC reads: “(Loss of benefit of time limit). Even if the time limit is established in favour of the debtor, the creditor can immediately demand performance if the debtor has become insolvent or has by his own act reduced the security which he had furnished or has failed to furnish the security he had promised”.
- 58.
- 59.
- 60.
A separate question concerns the issue whether the licensee’s consent is required for the contractual extension of the security to the royalties due by the licensee. From this perspective, it should be considered, as indicated earlier, that the enforcement of the guarantee would lead to the replacement of the current licensor/debtor with the creditor, an event which might require the consent of the third-party licensee under Art. 1406 ICC. Even apart from this contingency, an anti-assignment provision in the licence contract might prohibit the licensor from transferring his credit and have an impact on the contractual extension of the security over the IP to the royalties due. On this cluster of issues, see Uncitral (2011), pp. 41 et seq., 59 et seq.; Brennan (2009), pp. 30 et seq. The licensor of an IP right may create a separate security over the royalties due to him as receivables, rather than have them treated as mere incidents to the security over the IP asset itself. This situation should be visualized as a security over a credit rather than as a security over an IP asset; nevertheless, even so, some of the issues referred to in this footnote are likely to resurface.
- 61.
For a discussion of the issue, see Spolidoro (2010), pp. 47–48.
- 62.
For this point, see Nivarra (2009), p. 112.
- 63.
Spolidoro (2010), p. 48.
- 64.
Fabiani (1958), passim.
- 65.
- 66.
- 67.
I am not aware of any other writing which uses this metaphor; however, I submit that the expression is most appropriate here, as the earlier, competing claim may have until then remained submerged like a submarine. Italian torpedoes are pre-emptive strikes in Italian courts, which have the effect of greatly delaying effective remedies to the detriment of claimants intending to act before a foreign court having jurisdiction; however, in this situation there is at least the advantage that notice must be served to the other party, making him aware of the fix he is in. This advantage is not a given in transactions over copyright-protected works.
- 68.
Under this expression, which covers a vast and once-sprawling area, are understood various forms of publicly supported credit initiatives designed to foster specific economic sectors; see Tucci (2003), pp. 662 et seq.
- 69.
Falcone (2013), pp. 447–450.
- 70.
While sec. 2 of Art. 46 CTBCL refers to the secured sum of money as one of the items to be established in the agreement, sec. 3 of Art. 1 of Law No. 119/2016 refers to the “maximum guaranteed sum” (italics added). It would, however, appear to be against the principle of good faith interpretation of contracts under Art. 1375 ICC to assume that the debtor is authorized to substantially decrease the value of the collateral below this threshold.
- 71.
Thus, the debtor cannot be accused of taking an IP asset away from the pool of IP assets going into the collateral by registering it (it should be remembered that registered IPRs are not included in the collateral—see Sect. 2.3). The important issue is whether this decrease in the value of the collateral is set off by the inclusion or appreciation of other items.
- 72.
On this provision, see Ferrari (2016), pp. 77 et seq. (who at 80 highlights the similarity of these provisions to the rules applicable to real estate rather than to personal goods) and Bonomo (2013), Art. 137, pp. 1481 et seq. Sec. 2 of Art. 137 refers to Artt. 513–542 of the ICPC for matters not directly dealt with by Art. 137. For a more general look at the enforcement of security rights over IP, see Pagni (2009), pp. 194 et seq.; Biffi (2012), pp. 374 et seq.
- 73.
- 74.
As suggested by Ferrari (2016), p. 77.
- 75.
Such as Art. 137 IIPC, just mentioned above, for individual enforcement.
- 76.
See Art. 67, sec. 1(3) and (4) and sec. 2 IBA.
- 77.
For the mechanics of the bankruptcy proceedings and for the necessary coordination with Art. 111 IBA concerning relevant costs, see Zanichelli (2014), pp. 79 et seq.
- 78.
For a (rather awkward) attempt to reconcile the conflicting norms in Art. 137 IIPC and Art. 105 IBA, see Spiotta (2014), pp. 391 et seq.
- 79.
See in connection to this Spolidoro (2002), pp. 604 et seq.
- 80.
See Sect. 3.1.7, but also see Art. 54, sec. 2 IBA (providing for the entitlement to interest of all creditors having priority).
- 81.
Which may possibly be dealt with contractually in the agreement between the secured creditor and the licensor through a clause requesting that the latter avail himself of the right to secure a decision from the receiver under Art. 72, sec. 2 IBA.
- 82.
See the speech made by WIPO’s Director General Gurry (2011), passim.
- 83.
See European Law Institute (2014), p. 9.
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Ricolfi, M. (2020). Security Rights in Intellectual Property in Italy. In: Kieninger, EM. (eds) Security Rights in Intellectual Property. Ius Comparatum - Global Studies in Comparative Law, vol 45. Springer, Cham. https://doi.org/10.1007/978-3-030-44191-3_17
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