If you hold security interests in intellectual property
(IP), you should be aware of the effects of the
Personal Properties Security (PPS) regime and the
steps you need to take to protect your security interests. The
Personal Property Securities Act 2009 (Cth)
(PPSA) commenced in Australia on 30 January 2012
and established a law for the effective creation and enforceability
of security interests in personal property, which includes IP.
Previously, there were more than 70 Commonwealth, State and
Territory laws in respect of security and related interests, and
they were administered by more than 40 registers. The PPSA was
designed to replace this complex system in a uniform and consistent
The PPSA provided for a 2 year transitional period from
30 January 2012 (which ends on 30 January 2014)
for arrangements which existed prior to 30 January 2012. The PPSA
deems a transitional security interest to be perfected for the
duration of the transitional period. Given the end date for this
transitional period is now approaching, those with security
interests in IP need to register these security interests on the
PPS Register (PPSR) before 30 January
2014 in order to maintain the priority of those interests.
Otherwise, the priority in relation to those security interests may
be lost, and other parties who have a competing interest may be
given priority over those security interests. Further, if there is
an insolvency event relating to the party granting the security
interest in the relevant IP, if the security interest is not
perfected, then there is a risk that the secured party may lose
that security interest.
The PPSA provides for protection of security interests in IP
through a procedure of:
A security interest attaching to the relevant IP;
A security interest then becoming enforceable against a third
The security interest being "perfected".
Perfection, in this context, will occur when the security
interest has been registered on the PPSR.
The PPSR is the record-keeping system of all personal property
security interests under the PPSA. It is a web-based system where
registration of, and searches for, security interests can be
conducted online. Under the PPS regime, IP Australia's
registers (eg patents, trade marks and designs) are no longer the
legal registers for recording security interests in IP. All
security interests in IP now need to be registered in the PPSR.
There was no automatic transfer of security interests on IP
Australia's registers to the PPSR. Therefore, it is very
important that holders of security interests in IP review their
arrangements now to ensure these security interests are correctly
registered in the PPSR. Existing notifications of security
interests should still be maintained in the IP Australia registers
and continue to be notified to those registers in the future, as a
secondary measure to ensure that the holder of the security
interest is notified of any relevant activity regarding the
Review Your Security Interests Now
With the approaching deadline of 30 January
2014, steps should be taken now to identify your portfolio
of security interests in any IP, which might include trade marks,
patents, designs, copyright and intellectual property licences
(which are personal property over which a security interest may be
taken). An audit should then be undertaken to ensure that all IP
security interests have been properly recorded in the PPSR and if
they have not, that this occurs before the 30 January 2014
The PPS regime has much broader application than the IP issues
addressed above. In addition to addressing security interests in
any IP before the 30 January 2014 deadline,
businesses need to be aware of the full effects of the PPS regime
relevant to their own circumstances.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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