Intangibles

Location of Intangibles

Intangible assets give rise to difficulties. Difficulties arise in relation to the situation of intangible assets. The situation l depends on the class of asset concerned.

An intangible asset is usually situated where it can be recovered or enforced. Generally intellectual property rights are situated where they are registered.

Shares are situated where registered.  It is  normally the place where the register is kept or the place of incorporation that determines location. Similarly in relation to registered intellectual property the place of registration will usually determine.

In the case of debts, the location is deemed to be where the debtor resides. In this case the application of the law of the place is artificial as the debtor’s residence may change.

Assignability

The question of which law governs the intangible transfer varies with the nature of the asset. The EU Regulation has introduced reasonable certainty for EU cases.

Where an intangible interest is created under the law of a particular country, for example a contract such as a life policy, the question of assignability is decided by that law. Where the debt arises from a contract outside the Convention the law is probably the same.

In the case of intangibles determined by legal rights in a particular country e.g., registered intellectual property rights the place of registration governs assignability.

The Assignment

The validity of the assignment will be usually decided by the choice of law for the contract. If there is no choice the country with which the contract is most closely connected will apply. Certain contracts are not affected by the EU Regulation.

The mutual obligations of the assignee and assignor and assignee are governed by the law applicable to any contract they have entered. It does not apply to the proprietary  rights of the parties.

It  may be difficult to distinguish between the contractual and proprietary aspects.  Receivables are contractual in nature but have a proprietary aspect.

Effect of Transfer

The legal effect of the transfer i.e., property questions raise a number of issues. The law which governs the agreement to assign does not necessarily govern the ownership of property issue.

It may be possible to have a contract in Ireland to transfer UK or US registered intellectual property. The property question insofar as third parties are concerned is governed by the law of the place is usually governed by the law of the place where the property is situated.

The two possible options are that the law of the place where the asset is situated or where the interest was created apply. One position is that the law of the place of situation applies. This is straightforward in the case of immovable property.

In EU cases the law governing the rights to which the assignment relates applies. The law governing the relationship between the assignee and debtor and the conditions under which the assignment can be invoked against the debtor apply.

In non-EU cases. There are different views. One view is that the law of the place of the obligation applies. There is also support for the view similar to that under the Convention namely the law under which the interest was created to be the applicable law.

Rome Regulation

An assignment includes outright transfers of claims, transfers of claims by way of security and pledges or other security rights over claims.

Article 14 applies to contractual rights. It applies to a contract to assign a contractual claim or right. It covers outright transfers including by way of gift or security.

Article 14 of the Rome Regulation provides that   the relationship between assignor and assignee under a voluntary assignment or contractual subrogation of a claim against another person (the debtor) is governed by the law that applies to the contract between the assignor and assignee under the Regulation.

Article 14 does not apply to the proprietary aspects of intangibles.   The law governing the assigned or subrogated claim  determines its assignability, the relationship between the assignee and the debtor, the conditions under which the assignment or subrogation can be invoked against the debtor and whether the debtor’s obligations have been discharged.

Shares

Transfers of registered shares are governed by the place of incorporation. Article 14 does not apply.

Shares in dematerialised form, security accounts and nominee systems covering a pool of assets position raise more difficult and complex issues. The Hague Securities Convention if adapted would look through and apply the law of the ultimate or original place where the intangibles issued. The Convention has not been widely implemented

Intellectual Property

Issues regarding intellectual property are governed by the law of the place where protection is claimed. A common law a domestic court did not have jurisdiction regarding the validity of foreign intellectual property rights. However, this approach appears to be revised in England and Wales by more recent case law.

Article 24 of the Brussels I Regulation gives exclusive jurisdiction in the case of certain infringements of intellectual property rights.

The courts of each Member State shall have exclusive jurisdiction in proceedings concerned with the registration or validity of any European patent granted for that Member State;In proceedings concerned with the enforcement of judgments, the courts of the Member State in which the judgment has been or is to be enforced.

In proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, irrespective of whether the issue is raised by way of an action or as a defence, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of an instrument of the Union or an international convention deemed to have taken place.