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Pledging of exploitation rights: cinematographic films and software, specialised securities

By Yasmine EDDAM13 June 2025

In addition to traditional tangible assets, a company's economic value increasingly lies in its intangible assets. For creative and technological industries, the exploitation rights to a film or software often represent the bulk of their assets. Obtaining financing based on these assets requires security tools adapted to their intangible and complex nature. Pledging, a non-possessory security mechanism, offers solutions, but it comes in a number of very specific forms to meet the specific needs of each sector. Although these mechanisms are exceptional, they form part of a broader category of security interests in intangible property, including the complete guide to collateral sets out the general principles. This article focuses on two of these special pledges: the pledge of cinematographic films and the pledge of software exploitation rights.

Pledging of exploitation rights: a form of security suitable for complex intangible assets

The financing of creative industries, such as film or software development, is based on substantial investment, the profitability of which depends on the future exploitation of a work or technology. For creditors, whether banks or finance companies, the question of collateral is central. How do you secure a loan against an asset that has no tangible physical existence and whose value fluctuates? The law has had to innovate by creating tailor-made securities capable of capturing the value of these exploitation rights. The pledging of films and software is a perfect example of how security law has adapted to new economic realities. These mechanisms enable the debtor to retain the use of its assets so that it can continue to exploit them, while offering the creditor a solid guarantee, enforceable against third parties through specific publicity formalities.

Pledging cinematographic films: an original system

The production of a film mobilises significant capital well before the first revenues are generated. To facilitate its financing, the legislator has introduced a very specific pledge system, governed by the Code de l'industrie cinématographique. This security is designed to cover a hybrid object, which is both a tangible asset (the film's physical medium, or "negative") and a set of intangible assets (the copyright and exploitation rights). The main characteristic of this pledge is that it is a security interest without dispossession, which authorises the producer to continue exploiting his work. In this respect, it is similar to a chattel mortgage, giving the creditor a preferential right and a resale right. However, its originality lies in a third, particularly powerful right: a direct right to the film's box office receipts.

Creation of collateral: producer, basis and formalities

Only the film producer, i.e. the natural or legal person who has taken the initiative and financial responsibility for the work, may grant such a pledge. The scope of the guarantee is broad and flexible. The pledge may relate to all or part of the present or future ownership or exploitation rights associated with the film. It can even be set up on a "film in the making", even before production begins, which is essential for securing production credits. In formal terms, pledging requires a written document, which may be a private document or a notarial deed. However, the essential formality that determines its effectiveness in relation to third parties is its entry in the Registre Public de la Cinématographie et de l'Audiovisuel (RPCA), kept by the Centre national du cinéma et de l'image animée (CNC). This publicity is what makes the security enforceable against everyone. In practical terms, this means that no-one, including other creditors or a potential buyer of the film, can claim to be unaware of the existence of the guarantee.

The effects of pledging: preferential rights, resale rights and revenue rights

Once validly registered, the pledge produces three major effects for the creditor. Firstly, a preferential right, which entitles the creditor to priority payment from the sale price of the film in the event of compulsory realisation. The priority of this lien is determined by the date of its registration in the RPCA. Secondly, a resale right, which authorises the creditor to exercise its security over the film, regardless of who owns it. If the film is sold, the creditor can "follow" it and enforce its rights against the new buyer. The new buyer may, however, "purge" the pledge by paying off the creditor. Finally, and this is its most unique feature, the creditor has a direct right to the revenues generated by the exploitation of the film, whether from cinema admissions, sales to television channels or video distribution revenues. This mechanism, often referred to as "revenue delegation", enables the creditor to collect funds directly from exhibitors up to the amount of its claim, without these sums passing through the producer's account.

Impact of insolvency proceedings on film pledges

The strength of a security is often measured against the test of collective proceedings. If the production company goes into receivership, receivership or liquidation, the position of the secured creditor is affected. One of the notable weaknesses of this pledge is that it does not confer any right of retention on the creditor. Unlike a traditional pledge, where the creditor physically holds the asset, the creditor pledging a film does not have this control. As a result, his lien may be overridden by other claims arising after the insolvency proceedings have been opened for the purposes of the continuation of the proceedings. The ranking of creditors thus becomes a decisive issue, and the strength of the pledge may be diminished.

Pledging software exploitation rights: securing innovation

The technology sector, like the film industry, is a field where intangible assets are predominant. Software, which is an intellectual work protected by copyright, represents considerable economic value. To enable companies in this sector to secure their loans, the French Intellectual Property Code has introduced a specific pledge covering software exploitation rights. This security can be set up on a stand-alone basis or as part of a wider pledge. pledging of business assetswhen the software is one of the main components of the fund. The stand-alone plan makes it possible to target this strategic asset precisely in order to obtain financing.

Incorporation formalities: written form and registration with inpi

As with film pledges, the pledging of software exploitation rights must be the subject of a written contract. The validity of the deed is subject to this requirement. The written agreement must define the scope of the collateral with great precision. It is not enough to refer to the software by its commercial name; it is recommended that the technical elements concerned, such as source codes, object codes and related documentation, be listed. To be enforceable against third parties, the pledge must be entered in a special register held by the Institut National de la Propriété Industrielle (INPI). It is this registration, which is valid for five years and renewable, that gives certainty to the security and establishes the ranking of creditors among themselves. Without such publicity, the pledge deed has effect only between the signatory parties and would be ineffective against the debtor's other creditors.

The effects of pledging: preferential right and the droit de suite debate

Registering the pledge with the INPI gives the creditor a preferential right. In the event of the debtor's default and the compulsory sale of the software rights, the registered creditor will be paid in priority from the sale price, according to the rank given to it by the date of registration. If several pledges are registered on the same software, the rule of anteriority applies: first registered, first served. On the other hand, the existence of a resale right is the subject of debate. One important question is still the subject of most debate in academic circles: can the creditor follow the software if it is transferred to a third party? Unlike the law on pledges of business assets, which expressly provides for this, the law on software pledges is silent on this point. Some legal experts believe that the logic of this security, which is similar to a chattel mortgage, should imply a resale right. Others point out that the lack of systematic publication of software transfers would make such a right very difficult to implement in practice. This legal uncertainty calls for great caution when drafting pledge contracts.

Challenges and prospects for specialised collateral

Despite their undeniable usefulness in financing intangible industries, these specialised pledges present significant challenges. The main challenge is that of valuing the pledged asset. How do you accurately assess the value of a film that has not yet been released, or the commercial potential of innovative software? This assessment, which is often complex and speculative, is nevertheless the basis on which credit will be granted. What's more, the volatility of these assets is a constant risk. A film can be a commercial failure, software can be quickly rendered obsolete by new technology, leading to a rapid depreciation of the collateral. These difficulties explain why creditors often require additional collateral. Nevertheless, as the economy becomes increasingly dematerialised, the use of security over intangible assets is set to grow. Perfecting them and clarifying their grey areas, particularly with regard to resale rights for software, will be major legal challenges in supporting the financing of innovation.

Pledging assets as complex as films or software requires precise analysis and flawless contractual drafting. To secure your financing, guarantee your receivables or assess the solidity of an existing security, the assistance of a lawyer is a decisive asset. Contact our firm for an analysis of your situation.