Securing Patents Under U.C.C. Article 9 and USPTO Rules

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🔒 For Lenders: Ensuring a Perfected and Enforceable Security Interest

🔁 Pre-Closing Diligence

• ☐ Confirm patent ownership via USPTO Assignment Search

• ☐ Identify all relevant patents and patent applications, including continuations/divisionals

• ☐ Ensure debtor (borrower) has rights in the collateral

• ☐ Confirm there are no existing liens or licenses that impair enforceability or priority

✍️ Security Agreement

• ☐ Clearly describe collateral, including:

  • All issued patents

  • Patent applications

  • Proceeds, royalties, and income streams

• ☐ Include a schedule of patents with registration numbers

• ☐ Require borrower to maintain patents and pay USPTO fees

• ☐ Include covenants about:

  • Not abandoning patents

  • Reporting infringement or litigation

  • Not transferring ownership without lender consent

📁 Perfection Under Article 9

• ☐ File U.C.C.-1 financing statement in debtor’s state of incorporation

• ☐ Use precise legal name of debtor (check Secretary of State records)

• ☐ Use broad, but accurate, collateral language (e.g., “All general intangibles including patents and proceeds”)

🏛️ Recordation with the USPTO

• ☐ Prepare and file a confirmatory security agreement

• ☐ File via USPTO Assignment Recordation Portal

• ☐ Double-check:

  • Patent numbers are correct

  • Debtor/secured party names match U.C.C. filing

  • Agreement language identifies the interest as a security interest

🔍 Ongoing Monitoring

• ☐ Periodically review:

  • Assignment records at USPTO

  • U.C.C. financing statement status

  • Maintenance fee payments

• ☐ Include renewal or continuation of U.C.C. filing (5-year limit)

• ☐ Track encumbrances, litigation, and ownership changes

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🧾 For Borrowers: Staying Compliant and Protecting Your Assets

🧱 Internal Records and Ownership

• ☐ Maintain internal IP ledger with:

  • Patent numbers

  • Application status

  • Dates of issuance and expiration

• ☐ Ensure all patents are properly assigned to the borrowing entity

• ☐ Disclose:

  • Pending applications

  • Joint ownership

  • Prior licenses or encumbrances

🤝 During Negotiation

• ☐ Carefully review the security agreement for:

  • Scope of rights being pledged

  • Borrower obligations

  • Cure periods and default triggers

• ☐ Retain copies of all signed documents and filings

📣 Post-Closing Obligations

• ☐ Monitor and pay USPTO maintenance fees on time

• ☐ Notify lender promptly of:

  • Patent litigation or challenges

  • Office actions or reexaminations

  • Material changes to title or scope of rights

• ☐ Provide lender with:

  • Updated patent schedules annually

  • Notices of license agreements or transfers

🧯 In Case of Default

• ☐ Understand lender’s rights to:

  • Foreclose on or transfer patents

  • License, sell, or monetize rights

• ☐ Be prepared to cooperate in IP asset recovery or enforcement proceedings