Remote Control: Revised Article 9 and the Negotiability of Information

Abstract

This article considers the effect that rules on the continuity of security interests and proceeds under Article 9 of the Uniform Commercial Code will have on the negotiability (i.e., free alienability) of information assets, such as data and biotechnologies. The continuity of interest rules provide that a security interest will presumptively continue in collateral, even after disposition by the debtor. The proceeds rules provide that a security interest will automatically attach to, among other things, rights arising out of collateral, and to whatever is received upon the disposition of the collateral. Information assets, such as data and biotechnology assets, are often highly mobile, mutable and replicable. Thus, security interests in these assets will arise readily and will endure, even as these assets may travel through the chain of commerce, into the hands of good faith purchasers remote from the debtor and secured party that created the interest in the first place. This article calls the power to assert a security interest in assets at such a remove remote control. The article then considers arguments against remote secured party control under these circumstances. Among other things, remote secured party control presents challenges to historic understandings of the treatment of bona fide purchasers, and to doctrinal and theoretical approaches to property. This article concludes by suggesting that courts can mitigate the problem of remote control by relaxing the definition of property in this context. If data and biotechnology assets are property at all - a contested claim - it is not clear that they should be treated as such for the benefit of remote, prior secured parties in disputes with later bona fide purchasers.