The PPSA's two-year transitional period that granted
temporary protection to interests in personal property expires on
31 January 2014. After that date, many Australian businesses and
the holders of security interests over Australian intellectual
property rights will lose the protection they enjoyed during 2012
The Personal Property Securities Act 2009 (Cth)
(PPSA) commenced on 30 January 2012. The PPSA
replaced more than 70 different registers with a single, national
online register. It also did away with the formal requirements
previously necessary to create a 'security interest' and
instead expanded the term to include retention of title
arrangements, bailments and long-term leases or consignments of
The main purpose of expanding the scope of security interests
was to ensure that third parties (such as banks and financiers)
were not misled by the apparent ownership of assets in their
customers' possession. The PPSA overcomes that risk by
requiring all interests in personal property in another's
possession (including where ownership is retained) to be perfected
by registration on the Personal Property Securities Register
Who is affected?
The PPSA may impact a variety of businesses including those
have assigned Australian intellectual property
(IP) assets with a right of reversion if
conditions of that assignment are not fulfilled
have been granted security over a third party's Australian
IP assets (including IP licences), to secure payments or other
supply goods on credit or retention of title terms
lease or supply goods on hire purchase terms or
What interests are protected by the transitional period?
Parties with interests caught by the new regime (known as
secured parties) were granted a two-year
transitional period to register interests that arose prior to 30
January 2012. During that period, such interests (known as
Transitional Security Interests) are granted the
same priority as they were afforded in the pre-PPSA
That transitional period ends at midnight on 31 January
2014 (Canberra time).
What impact will this have on Australian businesses?
Many commercial or security arrangements formed before 30
January 2012 will lose their transitional protection if they are
not registered on the Register by 31 January 2014, exposing
businesses to risks including:
Loss of priority in IP assets or other goods against other
creditors (even if an agreement was entered into before those of
other creditors and regardless of retained ownership of those
An unregistered security interest in goods will be ineffective
if the party in possession of the owner's goods becomes
insolvent. The owner will be regarded as an unsecured creditor and
title to the goods may transfer to the insolvent entity.
A buyer may be able to buy IP assets or other goods free of the
owner's security interest.
Any security interests previously registered on the Australian
Patents, Trade Marks or Designs Registers have not
been automatically transferred. A new registration will need to be
made on the Register in order to maintain priority over any
subsequent security interests.
What can be done?
Businesses should seek legal assistance to:
review their agreements and terms and conditions to determine
whether they constitute security interests
register all security interests on the Register before
31 January 2014.
Prompt review of agreements and attending to registration of
Transitional Security Interests on the Register should protect
against third party claims.
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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