Final Examination

Professor Ward

July 15, 1999

Two Hours 8:30 am - 10:30 am


1. This examination contains two one-hour questions.

2. You are permitted to use your copy of SELECTED COMMERCIAL STATUTES your copy of UNFAIR COMPETITION TRADEMARK, COPYRIGHT AND PATENT - S ELECTED STAUTES and the STATUTORY SUPPLEMENT you purchased along with the class materials. No other materials may be taken into the examination room. The fact situations in the questions arise in Mainshire a mythical jurisdiction that has adopted the Official 1995 Version of the Uniform Commercial Code. Do not assume the existence of other special state legislation unless the question directs or invites you to do so.

3. Use a pen and write on only one side of the page.

4. Although no page limitation has been imposed, a concise, tightly reasoned answer will receive more credit than one which rambles. Read the questions carefully. Answer only the question or questions asked.

5. Do not write your name on any part of the examination, but be sure to put your examination number on each blue book you turn Please write legibly, GOOD LUCK!

Question # I
[Recommended time: 1 hour]

On March 1, Albright Associated [AA] finished work on a movie script and duly registered the copyright with the Copyright Office. On April 1, AA assigned all right in the movie script to Beacon Brothers [BB] by a proper written document of assignment. BB never recorded the April 1 assignment with the Copyright Office. Prior to this April I assignment, on February 1, BB had granted a security interest in all its present and future "accounts" and "general intangibles" to Coastal Credit [CC] to secure a $100,000 loan made by CC. On February2, CC recorded its security agreement, along with a proper cover sheet with the Copyright Office.

On May 15,AA assigned the same copyright-registered movie script to Dante Distributors [DD]. DD was a BEP - unaware of AA`s assignment to BB. BB has just defaulted on the loan with CC and CC wants to foreclose on the copyrighted movie script.

1. Who has priority in the copyrighted movie script, CC or DD? Explain. [Would your answer depend on whether the court followed the teaching of Peregrine or the teaching of Avalon Software?]

2. Assume that the Federal Intellectual Property Security Act is in effect and that BB had filed a proper federal financing statement under FIPSA on February 2 [instead of recording its security  agreement under section 205 of the Copyright Act]. Under these futuristic assumptions, who would have priority in the copyrighted movie script, CC or DD? Explain.

Question # 2
[Recommended time: I hour]

Mainiac Software is a software producer and software service provider in South River, Mainshire. On November 1, Mairishire Trust loaned Mainiac Software $200,000. The security agreement executed as part of the loan transaction granted Mairishire Trust a security interest in the following assets of Mainiac Software: 1. All the copyright-registered software and source code now owned or hereinafter acquired by Mainiac Software. [The security agreement contained a list of all such software and source code then owned by Mainiac Software identified by the name of the work and by the proper copyright registration number.] 2. All the income payable to Mainiac Software under existing contracts covering the sale or licensing of its software products, and, all after-acquired rights in such income that may arise in the future under similar contracts not yet made. 3. All general intangibles of Mainiac Software not described in either 1. or 2., above.

As part of the November I loan transaction, Mainiac Software duly executed a financing statement with the following description of collateral: "All equipment, chattel paper, instruments and accounts of the debtor Mainiac Software], now owned or hereinafter acquired, and the proceeds thereof All copyrights and trade secret rights in debtor's software and source code, now owned and hereinafter acquired and the proceeds thereof."

On November 7, Mainshire Trust filed the financing statement in the office of the Mainshire Secretary of State. PAainshire has adopted the First Alternative of UCC section 9401 (1).] On November 20, Mainshire Trust recorded a copy of the security agreement with a proper cover sheet in the Copyright Office under section 205 of the Copyright Act.

On December 15, Mainiac Software files a bankruptcy petition. The trustee has moved to avoid the security interest of Mainshire Trust in the property of the Mainiac Software estate. With respect to the items of collateral listed below, what argument or arguments would you expect the trustee in bankruptcy to make in support of avoidance and how should the bankruptcy judge rule on each argument?

1. Licensing fees owed to Mafiiiac Software on the date of the petition by various licensees of its software products.

2. The copyrights covering various Mainiac Software programs and source code that were registered with the Copyright Office prior to November 1.

3. Source code and other software products belonging to Mainiac Software for which no copyright registration has been made. Mainiac Software has taken appropriate steps to see that all of the proprietary information within this category of collateral qualifies for "trade secret" protection under the law of Mainshire.