Amended in Senate January 21, 2014

Amended in Senate January 6, 2014

Amended in Senate April 15, 2013

Senate BillNo. 650


Introduced by Senator Lieu

February 22, 2013


An act to add Section 9321.1 to, and to repeal and amend Section 9321 of, the Commercial Code, relating to business.

LEGISLATIVE COUNSEL’S DIGEST

SB 650, as amended, Lieu. Motion pictures.

Existing law provides, until January 1, 2015, that a licensee in ordinary course of business takes its rights under a nonexclusive license free of a security interest in the general intangible created by the licensor, even if the security interest is perfected and the licensee knows of its existence.

This bill would remove the repeal of this provision on January 1, 2015, thus making this provision in effect indefinitely.

This bill would also provide that a licensee of nonexclusive rights in a motion picture that is produced pursuant to one or more collective bargaining agreements, as specified, takes its nonexclusive license in the motion picture subject to any perfected security interest securing the obligation to pay residuals as set forth in the applicable collective bargaining agreement and arising from exploitation under the license.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

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SECTION 1.  

Section 9321 of the Commercial Code, as
2amended by Section 2 of Chapter 54 of the Statutes of 2013, is
3repealed.

4

SEC. 2.  

Section 9321 of the Commercial Code, as added by
5Section 3 of Chapter 54 of the Statutes of 2013, is amended to
6read:

7

9321.  

(a) In this section, “licensee in ordinary course of
8business” means a person that becomes a licensee of a general
9intangible in good faith, without knowledge that the license violates
10the rights of another person in the general intangible, and in the
11ordinary course from a person in the business of licensing general
12intangibles of that kind. A person becomes a licensee in the
13ordinary course if the license to the person comports with the usual
14or customary practices in the kind of business in which the licensor
15is engaged or with the licensor’s own usual or customary practices.

16(b) begin deleteA end deletebegin insertExcept as otherwise provided in Section 9321.1, a end insertlicensee
17in ordinary course of business takes its rights under a nonexclusive
18license free of a security interest in the general intangible created
19by the licensor, even if the security interest is perfected and the
20licensee knows of its existence.

21(c) A lessee in ordinary course of business takes its leasehold
22interest free of a security interest in the goods created by the lessor,
23even if the security interest is perfected and the lessee knows of
24its existence.

25

SEC. 3.  

Section 9321.1 is added to the Commercial Code, to
26read:

27

9321.1.  

begin deleteNotwithstanding the foregoing, a end deletebegin insertA end insertlicensee of
28nonexclusive rights in a motion picture that is produced pursuant
29to one or more collective bargaining agreements governed by the
30laws of the United States takes its nonexclusive license in such
31motion picture subject to any perfected security interest securing
32the obligation to pay residuals as set forth in the applicable
33collective bargaining agreement and arising from exploitation
34under such license. The terms “motion picture” and “residuals”
35have the meaning ascribed to such terms under the applicable
36collective bargaining agreements.



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