KEY PRINCIPLES AND CONCERNS REGARDING SECURITY INTERESTS IN INTELLECTUAL PROPERTY. The Perspective of Trademark Owners.

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1 KEY PRINCIPLES AND CONCERNS REGARDING SECURITY INTERESTS IN INTELLECTUAL PROPERTY The Perspective of Trademark Owners Submitted by: the Security Interests Subcommittee of the Treaty Analysis Committee of the International Trademark Association to the United Nations Commission on International Trade Law Working Group VI (Security Interests) Date: February 21, 2008 Thilo C. Agthe (Subcommittee Chair), Wuersch & Gering LLP, USA Oscar Alcantara, Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, USA Laura Anderson, Bristows, United Kingdom Brian M. Davis, Alston & Bird LLP, USA Lasse Søndergaard Christensen, Gorrissen Federspiel Kierkegaard, Denmark Jern Ern Chuah, Advanz Fidelis Sdn Bhd, Malaysia Jorge Di Terlizzi, Prieto & Carrizosa S.A., Colombia Lorraine M. Fleck, Sim & McBurney, Canada Otávio Padilha, Soerensen Garcia Avogados, Brazil Victor Tannenbaum, Abelman, Frayne & Schwab, USA Carla Schwartz (Staff Liaison), INTA, USA

2 A. INTRODUCTION Over the last few years, the importance of intellectual property assets as a source of financing has grown significantly. More and more companies (and individuals) are recognizing their ability to leverage their intellectual property assets to obtain financing and, with growing confidence in the value of intellectual property, more and more lenders are willing to accept intellectual property assets as collateral in such transactions. As a result, the granting of security interests in trademarks has become commonplace. The United Nations Commission on International Trade Law ( UNCITRAL ) has drafted and will soon publish a legislative guide (the Guide ) for developing countries regarding secured financing transactions. The Guide was adopted by UNCITRAL in December During a colloquium held at the invitation of UNCITRAL in Vienna in January 2007, it became clear that a significant percentage of intellectual property law experts believe that the Guide, in its current form, does not address intellectual property issues in an adequate manner. For example, the Guide recommends that recordation of security interests in a central (general) registry should suffice for perfection. 1 At the same time, the Guide indicates that recordation in a specialized registry, which we take to include a trademark office s registry, would be permitted and that it would trump a later made recordation in the general security rights registry. 2 However, in our view, it is not completely clear that the relevant recommendations would apply to intellectual property. Additionally, the Guide contemplates that, with respect to choice of law, where intangible assets are concerned, the law of the location of the debtor should always control, 3 a position that does not allow for the fact that the asset may be located in a number of different jurisdictions and may, therefore, be subject to a number of different laws. Because the definition of intangible assets in the Guide does not specifically exclude intellectual property (which has its own definition), and because the Guide lacks a specific recommendation regarding the applicable law in connection with intellectual property, we believe that confusion with respect to the choice of law applicable to intellectual property is likely. We also note that the Guide is not entirely in accordance with existing treaties concerning intellectual property, such as the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). 4 Because the Guide was not originally drafted with intellectual property issues in mind, the result is, in our view, somewhat incomplete. In recognition of the concerns voiced by a number of individuals and organizations with intellectual property interests, UNCITRAL, at the Commission s meeting in Vienna in June/July 2007, approved additional work, to take the form of an annex or addendum to the Guide, which will provide specific guidance to states as to the appropriate coordination between secured transactions and intellectual property law. On January 14, 2008 the Secretariat issued WP-33, entitled Security rights in intellectual property, Note by the Secretariat, which was discussed during a meeting of a group of experts in Vienna in January WP-33, a second draft of which was published on February 8, 2008, is a valuable, 1 See recommendation 32 2 See recommendation 74, subsection (a). 3 See recommendation We note with approval that, in recommendation 4(b), the Guide explicitly defers to a state s obligations under international treaties. We also note the Secretariat s position, expressed in Section 97 of WP-33, that there is nothing in the Guide that is incompatible with TRIPS. While this assertion is not necessarily incorrect, we believe it misses the point. The question is not whether the Guide is incompatible with TRIPS, but rather whether the recommendations in the Guide, if applied to intellectual property, could give rise to situations that would necessarily be at variance with TRIPS.

3 thoughtful and comprehensive overview of the issues and INTA is grateful to the Secretariat for the obvious hard work that has gone into this working paper. In light of the foregoing, the Security Interests Subcommittee of the Treaty Analysis Committee of INTA, on behalf of INTA s worldwide membership of more than 5,000 trademark owners and professionals, from more than 190 countries, takes this opportunity to submit for consideration the positions, principles and suggestions outlined in this paper, which are believed to be of particular importance to trademark owners. These are issues which INTA believes warrant consideration in any discussion dealing with secured intellectual property financing. INTA respectfully requests that these thoughts and principles be taken into account in any future drafts of WP-33. B. ISSUES AND OBJECTIVES I. Trademark owners should be able to realize the value of their trademarks and inventories of branded goods as collateral in loan transactions. Trademarks are valuable intangibles which can serve as collateral in loan transactions under the legal systems of most countries. With intellectual property becoming an increasingly important asset of many companies, the ability to use it as collateral in loan transactions is likewise increasingly important. For many companies, intellectual property constitutes a large percentage of their assets. Failing to provide for their use as collateral would handcuff such companies in obtaining financing. In furtherance of the goal of allowing trademark owners to benefit from the inherent value of their trademarks, INTA, therefore, urges that the Working Group should set itself the goal of developing a comprehensive Annex to the Guide, which not only points out the various issues to be taken into account in the context of intellectual property in commercial financing transactions, but which also provides specific recommendations and guidance, for each class of intellectual property, to enacting legislatures. It is INTA s position that the Annex should be as comprehensive and specific as the Guide is by itself. Any other result would, in our view, be a missed opportunity and would thwart the purpose of the mandate given to Working Group VI by the Commission. II. Trademark owners should be able to grant security interests in their trademarks without granting an outright assignment of rights. The Guide and any Annex thereto should be designed to allow utilization of the full value inherent in a broad range of assets to support credit in the widest possible array of credit transactions. The way in which the Guide currently pursues this objective is by giving secured creditors the right to exercise, in case of default, remedies with respect to encumbered assets with priority over other creditors, but not necessarily by transferring ownership of the encumbered assets prior to default. The grantor of the security interest is obligated to pay the creditor in the manner agreed to in the corresponding agreement or obligation, and, as a general principle, foreclosure of the encumbered asset is limited to events of default. Therefore, so long as the grantor pays its - 2 -

4 obligation in the manner agreed to with the creditor, the ownership right over the encumbered asset should remain with the grantor. 5 The foregoing should also be applicable to trademarks. Hence, where a loan or other obligation is secured with a trademark, the creditor would have a priority right (subject to applicable priority rules) over the trademark in case of default, but before default ownership and all rights over the encumbered trademark shall remain in the grantor. It follows that, by granting a security interest over a trademark, the trademark owner should not (and should not be required to) assign/transfer the trademark, including any registrations or pending applications, to the creditor prior to default. This would also mean that the creditor is not entitled to use, dispose of and/or benefit from the trademark before the trademark has been assigned to the creditor (or a third party) as result of a default from the debtor. The practice of creating assignments of trademark rights in order to effect a security interest in such property should be avoided. The assignment of the trademark owner s rights to the secured party could create uncertainty as to who is responsible for policing and enforcing unauthorized use of the trademark. If a secured party takes contractual responsibility for policing the trademark collateral, but does not, in fact, take action against unauthorized use of the trademark, the trademark s ability to function as an indicator of source would be diminished, to the point that the trademark could become worthless. Moreover, such an assignment from the grantor to the secured party might be characterized as an assignment in gross 6 resulting in outright abandonment of the trademark. Notwithstanding that ownership of a trademark should remain in the grantor before default, due to the specific characteristics of trademarks, the creditor is likely to require, during the time of the obligation, certain rights aimed to maintain the existence and ownership in the debtor of the asset that is securing such obligation. The creditor and debtor should be free to agree on the basis upon which the trademarks will be maintained. Rights granted to the creditor to protect its position may, without limitation, include: 1. the right of the creditor to maintain or renew the trademark registration where renewal is due before a transfer of rights to the secured party or subsequent purchaser is completed and/or recorded; 2. in special cases, such as debtor s bankruptcy 7, the right of the creditor to submit evidence of use and/or to defend the trademark when it is being challenged by third parties; and/or 5 We realize that there are circumstances where an asset that is given as security for a loan is transferred to the creditor and that the laws of some states have extended this principle to intellectual property assets. However, because of their particular nature, this option is undesirable where trademarks are concerned. 6 The term assignment in gross is often used to describe a purported assignment of a mark without the associated goodwill. Under the laws of many states, an assignment in gross is invalid, and the assignee acquires no rights by such a purported assignment. The rule prohibiting assignments in gross is intended to protect the public from the deception that might arise if the assigned mark becomes associated with goods or services of a different nature or quality than was previously the case. 7 We believe that it is more appropriate in accordance with the key objectives of the Legislative Guide (e.g. promotion of secure credit, encouraging responsible behavior by enhancing predictability and transparency, and facilitation of enforcement of creditor s rights) not to restrict to situations of debtors default and/or - 3 -

5 3. the right of the creditor to restrict the debtor s ability to assign, license or otherwise grant any third party an interest in respect of the trademark while the security interest is in effect. The creditor and debtor should not be precluded from agreeing to measures such as those set out above. The implementation of such measures may be dependent upon the operation of local trademark law in the relevant jurisdiction (for example, the ability of a creditor to renew a trademark). In consideration of the above, granting a security interest over a trademark should have the following consequences: 1. Before default: (a) (b) (c) The debtor keeps ownership over the trademark. The debtor is the only one entitled to use or license the trademark. The debtor and creditor should, however, be entitled to agree to measures that give the creditor some protection, for example: i. the right of the creditor to force the debtor to use the trademark in order to avoid non-use challenges; ii. iii. iv. the right of the creditor to penalize the debtor for lack of use of the trademark; the right of the creditor to file the renewal of the trademark registration; the right of the creditor to defend the trademark when it is being challenged by third parties; 2. After default: v. the right of the creditor to limit the ability of the debtor to assign, license or otherwise grant third parties interests in the trademark. (a) (b) The creditor should have a priority right over other creditors to obtain an outright assignment of the trademark, subject to applicable priority rules; The creditor should be entitled to enforce any contractual rights granted to it by the debtor with respect to the trademark (such as those listed at Sections 1(c)iii, iv and v above) regardless of whether the outright assignment of the trademark is completed. bankruptcy the right of creditors to maintain, defend and renew encumbered trademarks. The more confident creditors are regarding the existence and value of the assets offered in a secured financing transaction, the more likely trademark owners are to benefit from their trademarks is such transactions

6 III. The secured financing law should neither diminish the value of a trademark nor result in the inadvertent abandonment of trademark rights. There are a number of ways in which trademarks can lose their value. Among these are (a) failure to maintain adequate quality control, (b) failure to use the mark on the goods or services, (c) failure to use the mark properly, (d) assigning a mark without the goodwill of the business (in some jurisdictions) and (e) failing to properly maintain the registration of the mark. It is axiomatic that it is neither in the interest of the trademark owner nor the secured lender to do or permit to be done anything that might detract from the value of a trademark. In the case of the owner, the goodwill of his business may be at risk. In the case of the lender, the value of his collateral may be adversely affected. The following discussion gives examples of situations where a diminishment in value or abandonment of trademark rights may be caused in the context of secured financing. The first issue of interest is the quality control requirement. It is a fundamental principle of most trademark laws that a trademark owner must control the quality of the goods on which its trademarks are used. Trademarks function as a symbol of quality and source for the goods on which they appear. It is for this reason that, in many jurisdictions, a trademark license lacking a quality control provision will be considered a naked license, which may result in the complete loss of rights to the mark that is the subject of that license. In other words, if a trademark is not subject to quality control, it will result in the mark losing its ability to function as an identifier of source and quality. This notion leads to the rule that a trademark can be abandoned by failure to exercise adequate quality control over a licensee. Significantly, this standard for abandonment is almost always objective and the resulting forfeiture is involuntary i.e., the abandonment of rights occurs even if the owner had no subjective intent to abandon the trademark. Furthermore, it is not necessary to show that consumers actually view the mark any differently due to the failure to exercise quality control, because naked licensing is viewed as being inherently deceptive. It is easy to see, therefore, that a situation where a trademark owner may lose the ability to control the quality of the goods, including control over the channels of trade through which the goods travel, must be avoided. A potential for this situation exists, however, where a lender takes possession of goods (bearing a trademark) by reason of default by a borrower, and those goods are subject to a security interest. 8 In a situation where the defaulting borrower is a licensee and the inventory has now come into the possession of the lender, the rights of the licensor (the owner of the trademark) must be protected and respected. A lender should not, therefore, be entitled to dispose of the goods in a manner that is in conflict with the rights of the trademark owner, to the extent that such rights have not been exhausted. WP-33, in Section 19(a) suggests that [t]hese issues may well depend for their resolution upon the application of the exhaustion doctrine 9 in effect in the relevant jurisdictions. However, in 8 This situation is analogous to Example 1 in WP-33 (Section 10). 9 The exhaustion doctrine (often referred to as exhaustion of rights in the EU) is a concept in intellectual property law whereby an intellectual property owner will lose or exhaust certain rights after the first use of the subject matter which is the subject of intellectual property rights. For example, the ability of a trademark owner to control further sales of a product bearing its mark are generally exhausted - 5 -

7 this example, the exhaustion doctrine clearly is not applicable. As long as the goods are still in the possession of the manufacturer, not having been placed in the regular flow of commerce, the exhaustion doctrine cannot apply because no first sale has taken place. Another potential issue may arise if a lender modifies goods taken from a debtor after default. The lender who takes possession of the goods subsequent to default must understand that it may not remove the trademark from the goods (whether the goods were manufactured pursuant to a trademark license or not) and then sell those goods at a discount in order to recoup the defaulted loan amount. This would be implied reverse passing off, which damages a trademark owner just as much as traditional passing off does. 10 Accordingly, the secured financing law should ensure that a lender who takes possession of goods that are either subject to an intellectual property license or marked with the debtor s own trademark, takes the goods subject to the rights of the trademark owner. In this connection, we are concerned that recommendation 23, Effectiveness of an assignment made despite an antiassignment clause, may be misunderstood, as it may be taken to mean that anti-assignment clauses in intellectual property licenses are ineffective. We realize that this is not the intent of the Guide, 11 yet the terminological choices in recommendation 23 make confusion almost inevitable. Most intellectual property licenses contain anti-assignment clauses, meaning that the licensee is not permitted to assign (or burden with liens or security interests) the rights granted under the license and the goods bearing the licensed trademark. Therefore, if recommendation 23 is read out of the context of the Guide s relevant definitions, it may give rise to the mistaken impression that anti-assignment clauses cannot be enforced under certain circumstances. Coming to the issue of renewals of registrations of encumbered intellectual property assets, it is our view that a creditor should, in certain circumstances, have the ability to renew the registration, in order to preserve the value of the asset. On the one hand, a trademark owner may have no interest in maintaining the collateral subject to the security interest (the trademark), or the trademark owner may lack the financial resources required. On the other hand, the holder of the security interest has a vital interest in maintaining the trademark registrations and pending applications (if any) that have been given as collateral for the loan. Therefore, we propose that a state s trademark office should accept the secured party s payment of the renewal fee and the submission of evidence of use (where required under local law) regardless of who is, whether by following the sale of that product. The rule serves to immunize a reseller from infringement liability. However, it is important to note that such protection extends only to the point where the goods have not been altered so as to be materially different from those originating from the trademark owner. The reseller, for example, may not remove or alter the trademark applied to the goods by the trademark owner. 10 Reverse passing off falls into two categories, express reverse passing off and implied reverse passing off. In express reverse passing off, the original mark is replaced with another mark and the goods are then sold. In implied reverse passing off, the mark is removed prior to sale, leaving the product unbranded. The trademark owner suffers damages in each case. In implied reverse passing off, the purpose served by the trademark is thwarted by its removal from the goods. A trademark serves three purposes: it designates origin, it develops goodwill by allowing customers to associate a level of quality with a product from a specific origin, and it serves as advertising. The removal of the mark prevents the ultimate customers from knowing the true source of the product, creating a means for deceiving the customer and damaging the owner of the mark. 11 In the Guide, the definitions of the terms assignment and the related terms assignor, assignee and debtor of the receivable refer to receivables. We recognize that they do not apply to intellectual property

8 contract or operation of law, the legal owner of the subject registrations or applications at the time of maintenance or renewal. While this may be more of an issue for the intellectual property law (and not something that should be regulated by secured financing laws) of a state, it is nevertheless mentioned here because the consequence of non-renewal can be devastating to a party s rights in the trademark, depending on the local trademark law. Although in certain jurisdictions use of the mark is not necessary to maintain rights, in others it is vital to maintain the registration. It is of course in the best interest of all parties, trademark owner and lender, that the registration of trademarks subject to a security interest be maintained in good order. We do not mean to suggest that a holder of a security interest (or the administrator or executor) should not be required to comply with all other requirements for renewal or maintenance of a registration, including any requirement to show use or to explain excusable non-use of a mark, where required under local law. Generally speaking, however, the holder of the security interest should be endowed with the ability to renew and/or maintain the subject trademarks, by power of attorney or similar mechanism. At the same time, we do NOT mean to suggest that the secured lender should take a collateral assignment of the mark in order to facilitate the renewal of the registration (see the discussion of Issue II in this connection). In summary, we would urge that WP-33 be revised to include an in-depth discussion of the issues outlined above, in order to provide the Working Group with adequate background information for consideration in the drafting of the Annex. IV. The likelihood of purchaser confusion as to the source of goods or services must be minimized. One of the key objectives of trademark law is to give consumers confidence in the quality and origin of goods sold under a trademark. Trademarks establish a link between certain goods and a company and thus entail a guarantee of origin, authenticity and quality of the goods. Consequently, the prevention of consumer confusion is one of the objectives of granting trademark rights to a user. The Annex, therefore, should take into account the issue of purchaser confusion when using trademarks as security. One way in which such confusion might be created is in cases of collateral assignments (discussed above), where a lender takes ownership of a mark as collateral and the consumer may not have any certainty as to the origin of the goods. Also, in situations where a lender takes over inventory (movable assets) that bears the trademark of a licensor, a lender must not be allowed to misuse a mark, e.g. by disposing of goods bearing a trademark in a manner which damages the mark or leads to confusion among purchasers. If a lender takes over inventory containing a third party s trademark under a license, the lender s rights would be subject to the terms of the license (neglecting any exhaustion issues), i.e. the rights of the lender over that inventory would equal the rights that the licensee had. In other words, the creditor s rights in the collateral, once he takes ownership thereof, may not be unlimited. This is a limitation that should be specifically addressed in the commercial finance law, subject of course to the intellectual property law, of the enacting state. 12 In this context, we 12 We note that WP-33 addresses this issue in Section 179. We believe that the discussion in Section 179 needs to be broadened to explain in more detail the ramifications that arise when a secured lender acquires - 7 -

9 note that, generally speaking, exhaustion does not occur until the goods have been placed in commerce and it may be the creditor, having taken possession, who is the first party to place the goods into commerce. V. With respect to the acquisition of trademarks, the Annex should designate a clear method for interested parties to determine whether a trademark is encumbered by a security interest, including a method for determining whether such an interest has been released. A clear method to determine whether a trademark is encumbered by a security interest or whether such an interest existed but has been released is in the interest of the trademark owner, as it is an important and relevant factor for the marketability and the value of a trademark. 1. Without a clear method to determine the existence of a security interest, the completion of a business transaction may be thwarted. This is because potential purchasers may want to get a first impression of the status of the trademark without having to contact the trademark owner. This is only possible if there is a simple method to find out whether a security interest exists or existed at some stage and has already been released. In the context of business deals such as a merger or acquisition, a potential purchaser may hesitate to take an assignment of a trademark if it cannot be readily determined whether the trademark or other assets of the company are already encumbered by a security interest. Trademark owners also depend on a reliable and easy way of checking whether security interests exist. 2. For the value of a trademark, it is highly pertinent whether it is encumbered by a security interest or not. If it is not possible to determine for certain e.g. by means of a public register or another clear method whether a security interest exists for a trademark, the purchaser/assignee of the trademark will pay only a reduced price, because he will effect a security reduction in price to make up for possibly existing security interests. We note that the Guide defers to specialized registries where such registries exist, but we do not believe that the Guide is sufficiently clear on this issue. In Section 64, WP-33 points out that under the Guide, a security or other right registered in a specialized registry, has priority over a security right registered in the general security rights registry (see A/CN.9/637, recommendations 74 and 75). Recommendation 74(a) refers to a security right in an asset that is made effective against third parties by registration in a specialized registry or notation on a title certificate. Our reading of the Guide s definitions as well as the general applicability of recommendation 4(b), leads us to conclude that this recommendation may not necessarily apply to intellectual property, though we believe that the drafters of the Guide had intended that it should cover, for example, trademark registries. This issue requires clarification and we believe that the Annex provides an appropriate and convenient vehicle for such clarification. Therefore, we would urge that the Annex should devote a portion of its content to a discussion of intellectual property registries, recordation and, importantly, priority issues connected therewith. We are grateful to the Secretariat for including in WP-33 at Sections a discussion of the positions taken by INTA with respect to the recordal of security interests in trademarks, as found in INTA s Board Resolution of March 21, 2007, entitled Recordal of Security Interests in goods that embody or incorporate the intellectual property of a third party. See also our discussion of this issue in Section III of this paper

10 Trademarks. 13 We urge that the Working Group consider these principles and that they should be reflected in the Annex. In addition, it is important that the Annex recognize and discuss the issue of territoriality and related jurisdiction issues. We are grateful to the Secretariat for its discussion of this issue in Section 191 of WP-33. It is axiomatic in trademark law that trademark rights are territorial in nature. In other words, trademark rights end at the border of the jurisdiction in which they are created and/or recognized and/or registered. Accordingly, and this makes recordation of security interests in trademarks somewhat more complicated, the security interest must be recorded in the jurisdiction in which the trademark exists in order for it to be effective (and enforceable). Because it is not at all unusual that a trademark owner may own trademarks in locations and jurisdictions in which it has no established business location, lenders and debtors must be cognizant of the fact that a security interest in such trademarks may not be enforceable unless it is recorded at the situs of the trademark. A registration/recordal in a general registry located in the location of the debtor will be insufficient. With respect to jurisdiction and applicable law, it is our understanding that the Guide provides that the law governing a security interest shall be the country where the interest was granted. Unless otherwise provided (and we recognize that recommendation 4(b) may apply in this context), if a security interest is granted in country A with regard to mark X registered in country B, the law governing the security interest in that asset shall be the law of country A, notwithstanding that the mark is registered in country B. If our reading of the Guide is correct, the principle of territoriality and country of origin needs to be reinforced in Annex. As far as trademarks are concerned, a mandatory choice of law rule focusing on the location of the grantor of the security interest does not make sense. VI. Where a trademark owner has made a personal license of its trademark rights to another party, the Guide should not provide that the granting of a security interest in the licensee s assets could result in the assignment of such licensed rights without the trademark owner s consent. This scenario could arise when the trademark owner (the licensor ) licenses its trademark rights to one party (the licensee ), and the licensee grants a security interest in all of its assets (including intangibles and contract rights) in favor of its lender, the secured party. Under the laws of most jurisdictions, trademark licenses are deemed to be personal in nature and, therefore, non-assignable, absent some indication in the license to the contrary. The licensee s act of granting of a security interest in its contract rights, including its licensed rights, would not in and of itself violate this prohibition against assignment of the license. However, if the licensee defaults on its loan obligations, the secured party may attempt to satisfy the debt by effectuating a sale of the licensee s assets to a third party. The Guide (or Annex) should make clear that any attempt to sell such personal license rights to a third party is prohibited without the consent of the trademark owner/licensor. In this context we are concerned that this eventuality, including the issue of the assignment of royalties payable to a Licensor, is not adequately dealt with in the Guide. Therefore, it should be addressed in the Annex. We note with approval that the Secretariat has addressed the issue of

11 security rights in royalties in WP-33, specifically in Sections 54-56, 77 and 78. We are concerned that the issue is not adequately fleshed out and we urge additional discussion in this respect. It is the position of INTA, and we believe that this position is reflected in most national laws, that an anti-assignment clause with respect to royalty payment obligations, which prohibits the granting of a security interest in royalties payable to a Licensor, should at all times, including subsequent to default, be fully enforceable under contract law as between the Licensee and the Licensor. In other words, the holder of the security interest would be subject to such a restriction. C. CONCLUSION The intellectual property Annex to UNCITRAL s Guide is a welcome opportunity for the global intellectual property community to address any unsatisfactory, ambiguous or contradictory provisions in the Guide that would negatively impact intellectual property owners, purchasers and licensees, as well as financiers who rely on intellectual property as collateral. We believe strongly that the Annex needs to provide specific recommendations on how intellectual property issues that arise in the context of commercial financing should be treated. It will not be sufficient, and the Annex will fail of its purpose, if it serves solely as an issue-spotting document but fails to provide real and effective guidance to the legislatures of enacting states. INTA welcomes the opportunity to submit for consideration the foregoing positions, principles and suggestions on behalf of its international membership of trademark owners and professionals. INTA s goal is to assist UNCITRAL by ensuring that the Guide and Annex meet the needs of trademark owners and reflect the legal and commercial realities of trademark-secured transactions. INTA hopes this paper assists UNCITRAL and Working Group VI in developing the Annex to deal with the intellectual property and trademark issues raised by the Guide. For further information, please contact: Thilo C. Agthe Chair, Security Interests Subcommittee, INTA c/o Wuersch & Gering LLP 100 Wall Street, 21 st Floor New York, NY USA Tel: Fax: thilo.agthe@wg-law.com Bruce J. MacPherson Director, External Relations International Trademark Association 655 Third Avenue, 10th Floor New York, NY USA Tel: Fax: bmacpherson@inta.org Carla J. Schwartz External Relations Coordinator, Europe International Trademark Association 655 Third Avenue, 10th Floor New York, NY USA Tel.: Fax: cschwartz@inta.org