Pub. 1 2020 Issue 1

17 ISSUE 1 | 2020 WHY ADVERTISE IN PRINT? “Digital media is great, but we also need less mediated, more real experiences and I believe print is better at delivering that. Magazines offer the kind of tactile engagement you cannot find anywhere else. It satisfies the senses on many levels – sight, touch, smell. That’s unique to print. Also in a world where everything moves so fast – driven by the dictates of data and the digital world – magazines provide respite from all that: a moment of calm, contemplation, enjoyment.” — Vince Medeiros, Publisher, Think Quarterly, google https://www.thenewslinkgroup.com/publications/Goldfish/index.html — Satya Nadella CEO, Microsoft The true scarce commodity is human attention. (v) . . | . . Thenewslinkgroup.com lender would be well-advised to carefully determine for how long and through which channels the IP will be advertised for sale. If the borrower is simply a licensee of a patent or copyright, then federal law prohibits the assignment of the license to another party absent the licensor’s consent. Consequently, obtaining the licensor’s consent is essential. In an ideal setting, this consent will be obtained at the beginning of the lending relationship. The UCC also allows a secured creditor to accept collateral in full or partial satisfaction of the indebtedness owed. When considering this option, the lender should carefully analyze the collateral to determine whether the borrower was infringing upon someone else’s IP rights such that, by acquiring the IP, the lender may suddenly find itself as the target of an infringement suit. When liquidating trade secrets the lender must take steps to insure that (a) the lender actually gets possession of the trade secrets so they can be sold but (b) simultaneously protects the information from disclosure. Any inadvertent disclosure of the protected information may significantly devalue it or void any possible future claim for misappropriation of trade secrets. Given that IP is often an essential asset to viably operate a commercial enterprise, a lender also needs to consider what kind of post-workout relationship it wishes to maintain with its borrower and whether the borrower can return to financial health in the future. Just because an asset is pledged as collateral does not necessarily mean that it is wise for a lender to seize and dispose of it. Indeed, a borrower may be willing to surrender tangible collateral to satisfy a defaulted loan. But surrendering its IP—particularly its trade secrets—may likely be viewed as a commercial death penalty which will push the borrower to seek bankruptcy protection to save itself. Nevertheless, it is always best for a lender to maintain as many options as possible. Properly perfecting in the borrower’s IP creates an additional and very important leverage point for the lender. Conclusion When it comes to IP a “perfect and protect” mindset is the best course of action. A lender should make sure they are properly perfected under applicable state or federal law and then take steps under both state and federal law to protect that interest. In so doing, the lender can preserve a valuable asset which may enable a complete payoff of the loan rather than incurring an embarrassing write-off of unpaid debt. Michael D. Fielding is a partner in the Kansas City office of Hush Blackwell LLP and represents lenders dealing with troubled loans in and out of bankruptcy. Mr. Fielding is Board Certified in Business Bankruptcy by the American Board of Certification. 