Perfected Security Interests in Copyrighted Works: Recording, Indexing and Constructive Notice

Where a security interest in an unregistered work can be perfected by filing a financing statement with the Secretary of State (under a state’s version of Article 9 of the Uniform Commercial Code), a perfected security interest in a registered, copyrighted work must be recorded with the U.S. Copyright Office to perfect the creditor’s interest.

How To Perfect a Security Interest in a Copyrighted Work

Recordation with the Copyright Office involves the following steps:

1. Submitting the copyright-related document to the Copyright Office for recordation.
   
   
2. The Copyright Office reviews the document to determine eligibility for recordation.
   
   
3. If eligible, the document is numbered, imaged and stored in the Copyright Office’s electronic recordation system so that it is available to the general public (upon request) for inspection and copying.
   
   
4. The document is indexed in the Copyright Office’s online public catalog under the names of the parties involved, the titles of works listed in the document and the registration numbers for the works associated with the document (where applicable).
   
   
5. The original document is returned to the remitter, along with a certificate of recordation bearing the date of recordation and the volume and document number identifying the recorded document.

Intellectual property security interest filings in copyrights do not need to include registration numbers associated with the works, but a format for such numbers is suggested if a remitter wants to provide them. (Unfortunately, there are no formal linkages between registrations and recorded documents, which makes searching the index very challenging.)

Indexing and Electronic Title Lists

Indexing is an important part of recordation process – and the most labor-intensive. It creates an online public record containing information about the recorded document and all the titles it affects, and is searchable through the Copyright Office’s Public Catalog.

As a general practice, the Copyright Office manually transcribes the information from paper title lists submitted with a document for recordation into its online public catalog. There is an option for submission of electronic title lists where a document affects 100 or more titles of works.

Electronic list submission may help to speed up the processing of the documents, but it does not eliminate the need for submission of a paper title list. Nor is the electronic title list considered part of the recorded document. It is mainly used by the Copyright Office to facilitate indexing of submitted documents by allowing clerks to cut and paste the entries from the electronic list into the catalog. If an electronic list is inconsistent with the information provided in the paper document, and such discrepancies result in corresponding inaccuracies in the Copyright Office’s public catalog, the remitter bears the legal consequences of those inaccuracies, including losing the benefits of priority and constructive notice

If time is of the essence, consider using the Copyright Office’s special handling service as an alternative to expedite processing of documents submitted for recordation. Documents submitted with ‘special handling’ are returned to the remitter with a certificate of recordation about six weeks after submission. (Indexing also occurs faster as a result.) The cost for this expedited service is $550 but is subject to the Copyright Office’s approval.

The Benefits of Recordation

Recording security interests in intellectual property generally provides several benefits. In the case of a copyrighted work, recordation establishes priority between conflicting conveyances involving the same copyrighted work. Another benefit is constructive notice, meaning that upon recordation of the document with the Copyright Office, the general public is presumed to have knowledge of the facts stated in the recorded document and cannot claim otherwise.

Both priority and constructive notice are intended to protect purchasers, licensees and secured creditors from the risk of losing their interests in cases of conflicting assignments or the copyright owner’s bankruptcy. But certain conditions must be met to ensure these advantages.

Conditions for Priority

When two conflicting conveyances involve the same work, the one that was executed first will prevail if the document is:

• Recorded within one month after execution (or within 2 months if executed outside the U.S.).
• Recorded with the Copyright Office before the other document.

Otherwise, the later conveyance will prevail if all of the following conditions are met:

• Taken in good faith, for valuable consideration or on the basis of a binding promise to pay royalties.
• Taken without notice of the earlier conveyance.
• Recorded in a manner required to give constructive notice.

Note: For priority between a conflicting transfer and a nonexclusive license, see 17 U.S.C. § 205(e).

Conditions for Constructive Notice

Recordation of a document gives all persons constructive notice, provided that:

• The document specifically identifies the work it pertains to, so that it would be revealed by a reasonable search under the work’s title or registration number after the document is indexed by the Copyright Office.
• The work has been registered with the Copyright Office.

Recordation and Indexing: Some Peculiarities

The date of recordation is the date when the Copyright Office receives the accepted document in proper form and the proper fee, regardless of when the recordation specialist reviews and records the document. This is important to note as priority vests and constructive notice only attaches upon recordation of the document with the Copyright Office.

But considering the conditions needed for priority and constructive notice to apply, questions quickly arise on when a document is deemed properly recorded for constructive notice purposes.

Is the copyright-related document recorded when it is:

• Received by the Copyright Office?
• Imaged into a volume, open to public inspection?
• Indexed in the Copyright Office’s online public catalog?
• Returned to the remitter with a recordation certificate?

There are some mixed signals from the Copyright Office on this front. According to the Copyright Office’s Circular 12 on recordation, indexing comes first. (Likewise, the Report on Transforming Document Recordation at the United States Copyright Office notes that the Copyright Office creates a recordation certificate for a document only after a document has been imaged and indexed.) However, in the Compendium of U.S. Copyright Office Practices, indexing comes after the Copyright Office returns the original document to the remitter.

Our experience indicates that the latter is often the case, that indexing happens after the original documents are returned. Moreover, we have seen the gap widening between receipt of a recordation certificate and actual indexing of the titles in the catalog. The gap grows even longer when a submission concerns longer lists of titles.

Most recently, we have seen the Copyright Office’s online public catalog provide a shell record of the submission, as shown in the example below, listing only the first title and noting that “Titles associated with this document not yet indexed in the Public Catalog”.

This seems to confirm the Copyright Office’s practice of indexing after returning the recordation certificate but does not confirm at what point in time does recordation give constructive notice to the public.

Since the Copyright Act ties constructive notice to indexing by the Copyright Office, one would expect that constructive notice occurs only when indexing is complete. At the time of publication, we were unable to obtain confirmation of this from the Copyright Office, so it remains an open question.

The Copyright Office has made notable changes recently that allow the recordation process to be handled in a more efficient and speedy manner. As these efforts continue, we anticipate there will be a decreasing time gap between issuing a recordation certificate and indexing all the titles associated with the recorded document.

This content is provided for informational purposes only and should not be considered, or relied upon, as legal advice.