Personal property securities and intellectual asset management: thinking outside the box
In the past the concept of security and intellectual property was something that was fairly complex to understand and as a result it was even more convoluted when it came to the registration process. The Australian law makers have come to the rescue of confused property owners and made the procedure more user friendly and open. The solution to the confusion has been the Personal Property Securities Act 2009. For ease of reference we will refer to this as PPSA or the Act for the rest of this newsletter.
The difficulty with security interests is that it isn’t always clear when they have been created and what the potential consequences are that can flow out of its existence.
User Friendly Law
The PPSA offers an integrated system in Australia that allows the registration of security interests in personal property which are not land or fixtures. The act also considers personal property as collateral. What is even more convenient is that this one stop shop Act also provides rules having to do with enforcement and priority of securities. Since the Act is still relatively new there are many areas of the PPSA which have not been tested, registration is relatively inexpensive so we always recommend registering an interests if you are in doubt.
The ASIC Securities Register ended exactly one year ago in January 2014 and the following do not have legal priority anymore:
IP registers of patents,
trademarks,
designs and
plant breeders’ rights.
In the case of Maiden Civil (P & E) Pty Ltd v Queensland Excavation Services Pty Ltd [2013] NSWSC 852 the Court found that a person renting goods was able to grant a security interest over the goods to a lender which, following registration, took priority over the unregistered interest of the rights holder.
Something I have spoken about is the importance which attaches to the priority of different security interests in the same property. For example for those of you involved in agriculture and farming as there are special provisions for some security interests in crops, profits of crops and livestock. Upon perfection these will take over any other security interests, with a super priority interest being available.
Next Steps
We suggest that you consider the Personal Property Securities Act and understand the variety of types and priorities of security interests which can be created as a result of some agreements – to ensure your interests are properly protected. Of course, we are always here to assist with interpreting contracts for you – so if in doubt, feel free to touch base any time.
What Should I Do Next?
Contact us if you would like further legal advice on PPSA. Our lawyers at You Legal will be happy to assist you in whatever way we can.
* This blog is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.