Articles

PREDATORY LOANS SECURED BY INTERESTS IN REAL ESTATE (EQUITABLE MORTGAGES): A DISCUSSION OF ZAMAN V. FELTON
Mahlon L. Fast, J.S.C., Ret.

This article discusses the features that distinguish an equitable mortgage from a bona fide mortgage or a sale and lease-back transaction. Like a bona fide mortgage or sale and lease-back, an equitable mortgage—which frequently includes a deed, whether to be held in escrow pending a default, or recorded prior to default—includes the conveyance or grant of an interest in real property together with the concurrent intent that the grantor has the right to re-purchase that interest. The significant difference is that when the terms of a bona fide mortgage loan have been defaulted by a borrower, the default permits the lender-mortgagee (or an assignee of the mortgagee) to foreclose the interest included in the mortgage. The end result of that foreclosure is to foreclose, or “cut off,” the mortgagor’s right of redemption, i.e., the right to redeem, or re-purchase, the interest given to secure repayment. But in an “equitable mortgage,” the predatory lender attempts to avoid the procedural requirements, costs, and time required to foreclose a mortgage by already having a deed. The attempted avoidance of the requirement to foreclose is a sine qua non of an equitable mortgage and distinguishes it from a bona fide mortgage. That avoidance results in “clogging the equity of redemption;” i.e., no foreclosure proceeding is required on the failure of the grantor to exercise the right of redemption – the lender already has legal title to the interest in real estate, and the right to redeem, or re-purchase, the property has been “clogged.” Furthermore, if the transaction had been formulated as a true mortgage loan, and if there were a sale by a Sheriff (or other officer) following a foreclosure, any surplus funds (after satisfaction of the liens of judgment creditors and other encumbrancers) would be payable to, or for the benefit of, the grantor/mortgagor. But, if the equity of redemption has been clogged, there is no sale and no possibility of any surplus funds (the excess of the value of the security over the balance due on the mortgage) benefiting the grantor/mortgagor.

WHEN ARTIFICIAL INTELLIGENCE INVENTS: RECALCULATING THE PATENT ACT FOR AI-GENERATED INVENTIONS
Justin Dersh

This article discusses the challenges that artificial intelligence presents to traditional patent law and proposes comprehensive reforms to address AI-generated inventions. The author distinguishes between two types of AI: automated AI that functions as a tool aiding human inventors, and fully autonomous AI capable of independent invention. For automated AI, the article argues that current patent law is adequate, with human programmers, data trainers, and implementing engineers serving as inventors. However, for fully autonomous AI, the article proposes creating a new “sui generis” AI-Patent right with a shortened five-year term and requirements for commercial implementation to prevent anti-competitive concentration of patent power in large firms. The article also addresses prior art considerations, recommending USPTO rules to exclude mass AI-generated prior art that could stifle innovation, and infringement liability issues, arguing that end users of AI should be held responsible for patent violations. Finally, it suggests modifying non-obviousness standards by expanding the definition of “analogous art for AI-generated inventions while maintaining existing standards for the “person of ordinary skill in the art.” These reforms aim to balance innovation incentives with public interest while adapting patent law to the emerging age of artificial intelligence.