August 1, 2014
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COSTA RICA: New Law Promotes Use of Trademarks and Other Forms of IP as Collateral for Security Interests
On May 20, 2014, a new law, titled Ley de Garantías Mobiliarias, was published in Costa Rica. The Law, which is based partly on the Organization of American States’ Model Inter-American Law on Secured Transactions, is intended to facilitate the use of movable and intangible property as collateral to secure financing.
The Law significantly overhauls the existing legal regime and establishes a special framework for contractual creation, registration, publicity and execution of such security interests. Specifically, it provides for a special, unified registry for the recordal of secured transactions; broadens the types of properties that may serve as collateral; and provides for judicial or extrajudicial remedies in case of default. The Law contains provisions for license agreements and royalties over intellectual property rights, as well as trademarks, trade names and other forms of intellectual property.
As a general rule, provided the transaction is properly recorded in the unified registry, a lender secured under the Law would have a right to seize the asset if the borrower does not live up to its commitments. Alternatively, a lender would also have the right to auction the asset and be paid with the proceeds thereof.
In the specific case of trademarks, registered trade names and other intellectual property rights, the security interest is not directly recorded before the Industrial Property Registry, but rather before the unified registry. The Industrial Property Registry must publicize clearly that any property subject to registration therein may also be subject to a secured transaction registered in the unified registry. However, the specifics of this mechanic are to be defined in the implementing regulations, which, at the time of this writing, are still to be issued.
It is worth noting that the Law applies retroactively. Security interests established under the previous legislation will continue to be effective up to a maximum of three months from the effective date of the new Law. Within that three-month period, the creditor may register the security interest in the new unified registry free of cost.
Although every effort has been made to verify the accuracy of items in the INTA Bulletin, readers are urged to check independently on matters of specific concern or interest.
© 2014 International Trademark Association