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Intellectual property qualifies as “personal property” and can be secured

Contract Law News | August 2012

Under the Personal Property Securities Act regime, intellectual property and intellectual property licences are both classes of collateral in which a security interest may be created and registered.

Unless the terms of the licence agreement itself preclude it, both the licensee and the licensor may create a security interest in the licence, while the ultimate owner of the IP itself may create a security interest in that IP. Most commonly, such security interests will be created by way of a general security agreement of the kind that was referred to as a charge under the pre-PPSA regime. In the interests of certainty, licence agreements and other documents regulating the use of IP should deal explicitly with the PPSA and set out the circumstances, if any, in which the registration of a security interest will not breach the agreement. It is crucial for the registration of a security interest over IP or a licence that the following information is accurately recorded on the financing statement:

  1. The full and correct name of the licensor, licensee or owner of the IP, as the case may be; and
  2. The formal registration number of the relevant trade mark, design or patent.

If you require any advice regarding the potential pitfalls of dealing in IP under the new PPSA regime, please do not hesitate to contact us to arrange an audit of your IP and agreements.

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