Transitioning to perfection: how to protect your security interest in IP

Got a security interest in a trademark, patent or design? Well, listen up!

One of the best parts of the Personal Property Securities Act 2009 (PPSA) coming into effect in 2012 was the two year transitional period that automatically protected all security interests. The purpose of this transition period was to let everyone have a little wiggle room whilst they got used to the new PPSA environment. But, this period will expire on 30 January 2014, so it's time to consider what happens next.

Under the PPSA, if you want your security interest to be enforceable, and give you priority over everyone else, it must be perfected. It's not necessarily our definition of "perfection", but, under the Act this occurs when your security interest is registered on the Personal Property Security Register (PPSR). Set up under the PPSA, the PPSR is the web based record keeping system that deals specifically with the registration and searching of security interests.

Thanks to the PPSA's automatic migration process, some security interests with transitional protection have already been registered on the PPSR, but many have not. One area not lucky enough to be automatically transferred into the PPSR are the security interests held over Intellectual Property (IP) registered with IP Australia. This means it is very important for those who have interests over IP (such as trade marks, patents, designs, copyright and intellectual property licences) to now perfect them before the transitional period expires.

If your interest isn't perfected before 30 January 2014, you will risk:

• your security interest ranking behind another creditor even though your interest was created first; or
• your security interest transferring to the person or entity who granted you the interest if they become insolvent. If this happens, you will have the same limited rights as an unsecured creditor.

After reading all this ... what should you do to make sure all of your security interests are protected?

• work out what security interests you hold;
• identify any interests that would have been automatically migrated across;
• register all interests that weren't automatically migrated across before 30 January 2014; and
• going forward, make sure all relevant interests are registered on the PPSR.

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