Intellectual Property and PPSR

The Personal Property Securities Act 2009 (Cth) (“PPSA”) created the Personal Property Securities Register, which from 30 January 2012 replaced many other registers.

 It is notable that in the case for intellectual property (IP), including IP and IP licences, a number of different security interests may potentially be granted over the same IP. These different security interests are, for example:

-          Security interest over IP licence. However, an IP licence itself cannot be registered as a security interest but only a security interest granted over the IP licence can be registered.

-          Security interest over underlying ownership of IP (patent, design etc).

-          Security interests over gods where IP applies (e.g. designer promotional goods). It is notable that there is a presumption under part 3.5 of the PPSA, that any IP required to be used in relation to goods where IP applies is subject to the same security interest, unless the security agreement relating to the goods specifically provides otherwise.

-          Security interest may be created over the proceeds from the IP licence.

These security interest maybe a completely searate and competing security interests.

There are some specifics regarding registration of securrity interests over IP. Registration on the PPSR will only be effective to the extent that the relevant information is correct. Security holders should always include a positive obligation on grantors to notify them of any changes in relevant information.

Of particular importance in IP security interests is the inclusion of the relevant serial number which identify these and failure to register it may invalidate registration.

Priority of Competing Interests

As there may potentially be several competing security interests over the same IP or IP licence, part 2.6 of the PPSA sets out the priority between competing security interests. In broad summary, a purchase money security interest (PMSI) takes precedence over any other type of security; a perfected security (a security agreement which has been validly registered) takes precedence over an unperfected security (a security agreement which hasn't been registered, or hasn't been validly registered); and if there are two or more competing PMSIs, or two or more competing perfected security interests, the first in time takes precedence. Often these rules would not apply in this simple way and each situation should be managed and determined in accordance with specific circumstances and specific rules of PPSA.

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