Emilie van Kempen
Employment law, Liability, disputes and litigation
02 January 2019
Emilie van Kempen |
- Intellectual property
- Software
- IT law
- Contracts
- Case law
- Emilie van Kempen
Pledge on software
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Preference
It is probably known that the possibility exist to establishing a right of pledge on something. For example, on, shares, stock or on a domain name. By obtaining this right of pledge you will obtain more security if agreements are not fulfilled. The right of pledge gives you a preference over obtaining money or to sell certain goods publicly.
Deed of pledge
Such a right of pledge can be established on movable property, as long as these can be described clearly. This must be done by means of a so-called deed of pledge. It must specify exactly on which goods a pledge is established. In this way, you can also establish a pledge on the copyright on software.
Deeds of pledge contain a very general description
However, many deeds of pledge contain a very general description of the goods on which that pledge is established. For example: "on all current and future business assets". But does this also include goodwill? And software?
Are goodwill and software covered?
The Court of Amsterdam has recently ruled on this. (ECLI:NL:RBAMS:2018:6951) This includes, following a judgment of the Supreme Court (ECLI:NL:HR:2002:AE7842 (Mulder q.q.-Rabobank)) that it is sufficient for the establishment of a pledge that the deed of pledge contains such information that, possibly afterwards, on the basis of this information it can be determined which claim(s) the deed of pledge concerns. This can work perfectly well if it concerns a pledge on claims of third parties. After all, the accounts will then show which third party claims are involved. But a simple general description such as "pledge on all goods" makes the pledge insufficiently determined and also insufficiently determinable. As a result, no valid right to pledge has been obtained.
Attention! Banks often use a description that is described by the court in this judgment as too general, as a result of which no valid right to pledge is established!
Establishing a pledge on software is not that simple. If a pledge is to be established on the copyright on software, it must be clearly and concretely described which software is involved. But that is precisely the difficulty with software: after all, software is usually subject to change. Think of new updates or even just security updates.
It is therefore important to make it sufficiently determinable which software is concerned. This does not necessarily mean that the copyright on the software and all its special features must be described to the bitter end. This will often not even be possible. Think of the further development of software. This all depends on the circumstances of a particular case.
We recommend therefore that you should provide yourself with good legal advice if you want to establish a right to pledge on the copyright on software. Before you know it, you may miss out - against expectations.
For legal advice about deeds of pledge, but also regarding copyright, please contact WiseMen Advocaten.
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