The Personal Property Securities Act 2009 (Cth) (PPSA) will commence 30 January 2012. It creates a new regime for dealing with security interests in personal property, including security interests in relation to intellectual property and intellectual property licences. In particular, the PPSA rules about priority and enforcement now apply in relation to security interests in relation to intellectual property (and intellectual property licences)—not the complex rules under the Australian Designs Act, Patents Act and Trade Marks Act.
There are some important steps you need to take now in relation to any security interest you have in relation to intellectual property, and any intellectual property interest over which you may wish to grant a security.
Register on the PPSR any security interest recorded on an Australian IP Register
The new Personal Property Securities Register (PPS Register) will now function as the only register on which security interests must be recorded in order to be enforced, or have priority over other security interests.
If you have a security interest in relation to registered Australian IP, and that interest is currently recorded on the Australian Designs Register, Patents Register or Trade Marks Register (IP Registers), you should now take steps to record that security interest on the Personal Property Securities Register. While there will be a grandfathering period of 24 months, unless that security interest is recorded by the end of that grandfathering period it will lose priority and enforcement status.
New PPSR – due diligence
The existing IP Registers will continue to be the place to look to determine whether registrations exist, and details of ownership, scope and priority of trade mark rights.
This means that in any due diligence, you will need to look at the IP Registers to review issues going to IP and ownership, and the PPS Register to determine whether security interests have been recorded against registered Australian IP and are enforceable.
IP licences
In your licences, you should consider:
- if you are a licensor, restricting a licensee’s ability to charge, or create a security interest in relation to its licence rights
- if you are a licensee, restricting a licensor’s ability to charge, or create a security interest in relation to the licensed IP.
Options to re-acquire IP
Options to acquire, or re-acquire IP may be security interests, if the option secures payment or performance of an obligation.
You should check the terms of any arrangement under which you, or a third party, has an option right in relation to IP, and consider whether you need to register a security interest
IP in equipment – consider your security arrangements
If a secured party would need to exercise IP rights (or IP licence rights) in order to use goods or equipment covered by a security, and the security attaches to the IP (or IP licence rights), the PPSA applies to the IP (or IP licence rights) in the same way as it applies to the goods or equipment.
This means that if the secured party exercises its security in relation to goods or equipment, the secured party may exercise the IP rights (or IP licence rights) in relation to the goods or equipment to the same extent as the entity that granted the security.
You should consider if this is appropriate for your security arrangements, and if relevant, explicitly set out in security documents how relevant IP (or IP licence rights) may be used if the security is exercised.
Supplies of goods
You should check your supply agreements (and similar agreements under which you provide or give access to goods) in relation to how you deal with title to the goods.
Retention of title clauses are security interests under the PPSA. You should consider registering a security interest in respect of any retention of title clauses or other security interests that you may have under those agreements.
This article was written by Amalia Stone, Senior Associate, Sydney.
More information
For information regarding possible implications for your business, contact