A ruling on unregistered copyright by a US appeals court will make it easier for businesses to use their intellectual property as collateral for bank loans in the US, according to a report by US legal journal The Recorder.

In the US, as in the UK, copyright exists in works, such as literature, songs, software code or designs, from the moment any such work is created. However, there are various reasons why copyrights are registered with the US Copyright Office. In the UK, there is no equivalent registration scheme.

Reasons for registering copyright in the US are various. If you wish to bring a lawsuit for infringement of a US work, registration is required. Many choose to register their works simply to have the fact of their copyright on the public record and have a certificate of registration. Also, registered works may be eligible for statutory damages and lawyers’ fees in successful litigation.

The case decided yesterday was a contest over ownership of unregistered copyrights between Silicon Valley Bank, which held a security interest in the copyrights from the original owners, and Aerocon Engineering, a company that bought the same copyrights from the bankruptcy estate of the owners. The copyrights were in designs for aeroplane modifications.

Aerocon argued that its claim to the copyrights ranked above that of the bank because, in the absence of registration, the copyrights were not “perfected” according to the relevant law. The court disagreed. It wrote:

"Though Congress must have contemplated that most copyrights would be unregistered, it only provided for protection of security interests in registered copyrights. There is no reason to infer from Congress's silence as to unregistered copyrights an intent to make such copyrights useless as collateral by preempting state law but not providing any federal priority scheme for unregistered copyrights. That would amount to a presumption in favor of federal preemption, but we are required to presume just the opposite."

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