Personal property securities and IP in Australia: a new article

"The Personal Property Securities Act and IP: a simpler way?" is the title of an article by the Allens Arthur Robinson triumvirate of Tim Golder, Tom Reid and Thomas Middleton. This article has just gone live on the website of the Journal of Intellectual Property Law and Practice (JIPLP), where it may be accessed by subscribers or rented for a limited time by non-subscribers. According to the abstract:

"Australia's new Personal Property Securities Act came into operation on 30 January 2012. It regulates security interests in nearly all kinds of personal property, including IP, and contains rules governing priority between competing security interests. The Act expands the traditional concept of a security interest to include interests such as those arising under retention of title clauses.

The Act has replaced a range of registers of personal property security interests with a new, online Personal Property Securities Register, or PPSR, which will serve as an authoritative record for priority purposes. New security interests must be registered on the PPSR if the secured party is to have priority over holders of security interests in the same property, although there is a 24-month transitional period during which unregistered pre-existing security interests will remain protected.

IP practitioners should be aware of practical issues that may arise when registering or searching for security interests in unregistered IP, such as copyright. Non-Australian practitioners will also need to be mindful of the potential for the Act to apply to transactions involving Australian registered IP, even where the owner of the IP is not Australian".

The IP Finance blog has been monitoring this topic since it was first mooted back in 2008 (see earlier posts here, here and here).

Australia: new register affects security interests in IP

The most recent Arthur Allens Robinson IP Focus is on "IP and the transition to the Personal Property Securities Act".  According to its authors (Tim Golder, Tom Reid and Geoff McGrath), companies and individuals that own, license or hold security interests in intellectual property should be aware that the Personal Property Securities Register (the 'PPS Register') will go live on 30 January 2012, ushering in the reforms implemented by the Personal Property Securities Act 2009. This focus looks at the transitional arrangements and the implications of the new regime.

IP owners and their advisers should be aware that security interests over intellectual property which have already been registered with IP Australia (the Australian patent and trade mark office) will not be automatically migrated to the PPS Register and will need to be re-registered. During a 24-month transitional period, pre-existing security interests will continue to be protected -- even if they have not yet been registered on the PPS Register. Once that period ends, owners of pre-existing security interests that have not been registered will risk losing priority.

Thanks are due to Robyn Chatwood (Slaughter and May) for drawing my attention to this item.

Australia's new personal property securities regime affects IP from next May

In May 2008 the IP Finance weblog noted proposals for reform of the law relating to personal property securities and intellectual property in Australia. A recent piece, "Personal property securities reforms and intellectual property", by the Allens Arthur Robinson team of Diccon Loxton, Tim Golder, Rebecca Sadleir and Robyn Chatwood, brings the topic up to date, summarising the impact of new rules that come into effect in May 2011. You can read it in full here.

The new law is to be found in the Personal Property Securities Act 2009 (Cth), which establishes a single national law governing security interests and similar transactions with respect to almost  all tangible and intangible assets -- not just IP -- and is fairly similar to the law applicable in New Zealand. It will make it easier to securitise IP assets when raising funds, providing a single register of security interests for all registered IP rights. Among the many points to note is that existing transactions raising finance against projected licensing royalties or franchise fees will be affected by the reforms and will therefore need review.

PPS proposed for Australia

In November 2006 the Australian Attorney-General released a discussion paper proposing significant Personal Property Securities (PPS) reforms.[1] In this context, “personal property” is any form of tangible or intangible property (other than land or buildings) and includes IP rights. The proposed reforms intend to establish a single, national PPS regime for the registration, protection and enforcement of personal property securities in Australia. The immediate need for reform is the existence of more than 70 separate Acts currently governing PPS in Australia and the reforms are based on similar PPS systems adopted in Canada and the United States.

On 16 May 2008,the A-G released a “consultation draft” of the Personal Property Securities Bill 2008 for public comment.[2] Submissions have been invited by 15 August 2008. At the same time, the A-G’s Department also released a Request for Tender that invites bids from information technology companies interested in building the new electronic PPS Register.

The stated goals of the PPS reform are

* to simplify the existing, fragmented PPS system by creating a single, national online register covering all forms of personal property (including, therefore, all forms of IP);
* to provide a more certain system of taking, registering, and searching security interests over all personal property; and

* to make secured lending more cost-effective and attractive to lenders.

The consultation period runs for three months and, although the PPS legislation has a high political priority, it would be optimistic to think that the Act in its final form will be passed before 2009. Drafting the legislation is the (comparatively) easy part - building the IT platform for the PPS Register may take much longer.[3]

[1] Attorney-General’s Department, “Review of the Law on Personal Property Securities – Discussion Paper 1 – Registration and Search Issues”, November 2006.
[2] See here. Press Release here
[3] See the Press Release here

This item was supplied to IP Finance by Australian solicitor Julian Gyngell.