Do you have security interests, such as a mortgage, a charge or a lien on intellectual property? If so, you should be aware of the effect of the Personal Property Securities Act 2009 (Cth) (the PPS Act) on your security interests. You have a 30 January 2014 deadline to act to maintain the priority of your interest.
The PPS Act came into effect on 30 January 2012 and operates as a law for the effective creation of security interests, which involves, in very broad terms, the “perfection” of the security interest. In general, perfection means that the secured party has taken every available step to ensure that its security interest has priority over the interest any third party may have in the same collateral (i.e. the pledged asset).
One of the ways to achieve “perfection” is to register the security interests in the Personal Property Securities Register (the PPS Register), which is intended to be the “one stop shop” for the online registration and searching of all personal property security interests.
Prior to the introduction of the PPS Register, security interests in Australia could be recorded on over 30 different registers. More than 4.7 million registrations from a variety of Commonwealth, State and Territory registers were migrated to the PPS Register before its commencement. However, security interests on intellectual property recorded on the Patents, Trade Marks and Designs Registers did not migrate to the PPS Register.
If you hold and have recorded security interests on the Patents, Designs and Trade Marks Registers prior to 30 January 2012, you will need to take a positive step to record such interests with the PPS Register before 30 January 2014 to maintain your priority. Failing to do so may result in competing security interests which arise at a later date than your interest taking priority over your security interest.
Secured parties are able to continue to record their security interests with respect to patents, trade marks and design registrations on IP Australia’s Registers. This will enable registrants to receive notifications, be given an opportunity to be heard or make submissions under various provisions of the IP legislations. However, recordal of such security interests on the IP Registers will generally have no legal effect on the IP owners’ entitlement to deal with their interest in the intellectual property. The priority of security interests is only governed by the PPS Act.
What should you do?
- Identify and undertake a review of the security interests you have over any intellectual property or intellectual property licences.
- Ensure any “transitional security interests” (i.e. security interests that arose before 30 January 2012 or after that date, but pursuant to a security agreement in force before that date) are recorded on the PPS Register before 30 January 2014 to maintain their existing priority.
Any defects in registration may render the security interest invalid or become unperfected. Therefore, the best policy is to liaise with IP professionals when registering these interests or engage their services to undertake registration on your behalf.