## Facts

- Corinne Rice made a $30,000 term loan to Clean Air Technologies International, Inc. (CATI) in August 2001.
- CATI executed a general security agreement granting Rice a security interest in specified UCC Article 9 collateral categories, including “General Intangibles,” for property “now owned or hereafter owned or acquired,” “including WITHOUT LIMITATION.”
- CATI defaulted on the note.
- In September 2007, Rice obtained a money judgment against CATI for $40,841.11.
- CATI owned or held two U.S. patents; the applications predated the security agreement, but the patents issued afterward.
- Rice moved post-judgment for an order compelling CATI to deliver the original patent instruments and related registration/confirmation documents as collateral.
- CATI and David Miller opposed, asserting the parties did not intend to pledge patents, the agreement was vague as to patents, and patents had to be scheduled to be included.

## Issues

1. Whether CATI’s patents fell within “general intangibles” under New York UCC Article 9 and the security agreement’s collateral description.
2. Whether, after default and judgment, Rice was entitled to a court order compelling CATI to deliver the patents and related documents, and under what conditions.

## Decision

- The court granted Rice’s motion.
- The court held the patents were included in the collateral as “general intangibles” covered by the security agreement, including after-acquired property.
- The court ordered CATI to deliver to Rice’s counsel the original U.S. letters patents and all registration/confirmation documents in defendants’ possession.
- The court conditioned the turnover by prohibiting Rice from selling, transferring, re-pledging, using as collateral, or otherwise disposing of any interest in the patents without further court order.

## Legal Principles

- A security agreement granting an interest in UCC Article 9 collateral categories, including “general intangibles,” can cover patents even if “patents” are not expressly listed.
- “Now owned or hereafter owned or acquired” language extends a security interest to after-acquired collateral, including intellectual property that issues after execution.
- Objective contractual text controls over asserted subjective intent to exclude an asset from collateral when the agreement uses broad Article 9 categories and expansive terms (e.g., “including WITHOUT LIMITATION”).
- A reference to schedules that may be delivered to the secured party can be treated as additive rather than a condition precedent, where the agreement’s language indicates schedules supplement rather than limit collateral.
- Courts may order turnover of collateral to a secured creditor after default while imposing restrictions to preserve the collateral pending further judicial direction.

## Conclusion

The court treated CATI’s patents as “general intangibles” within the security agreement’s Article 9 collateral grant, required turnover of the patent instruments and related documents to the secured creditor after default, and restricted any disposition of the patents absent further court order.


Rice v. Miller, 864 N.Y.S.2d 255 (Sup. Ct. Erie Cnty. 2008)