In her recent guest post for Patently-O, Susan Glovsky lamented the inadequate system for recording assignments of, and security interests over, patents in the United States and called for the introduction of a national system for recordation of patent rights. This post gives a brief account of Australia's recent experience in this area.
The Australian patents legislation (the Patents Act 1990 (Cth)) requires assignments of patents to be in writing signed on behalf of the assignor and assignee (§14). If the particulars of an assignment are not entered on the Patents Register, the document is not admissible as evidence of the assignee's interest unless the proceedings fall within one of a number of limited exceptions (for e.g., if a Court otherwise directs or to enforce equities). The enforcement of equities in relation to patents and patent licenses has changed with the introduction of the Personal Property Securities Act 2009 (Cth) (PPSA).
The PPSA brings significant reform to the law in relation to security interests in personal property – which includes registered and unregistered intellectual property. One of the most important aspects of the PPSA is the implementation of a new public-access PPS register which has been promoted as a simple and inexpensive single repository for the registration of security interests. That register went live on 30 January 2012. The PPS register can be viewed at http://www.ppsr.gov.au.
A key driver for the establishment of the PPSA register was to harmonise the over 70 separate Acts that regulated security in personal property. The PPSA establishes a complete set of rules for determining priority between security interests and also for determining under what circumstances a purchaser of collateral will take the collateral free of the security interests in it. The old common law and equitable principles have been replaced.
Under the PPSA, "personal property" is any form of property other than land and certain statutory licences. It includes IP and IP licences. The definition of IP under the PPSA includes: "the right to exploit or work an invention, or to authorise another person to exploit or work an invention, for which a patent is in effect under the Patents Act 1990". A "security interest", for the purposes of the PPSA, is defined broadly as an interest in personal property provided for by a transaction that, in substance, secures a payment or the performance of an obligation.
Under the PPSA, protection of a security interest involves three steps: attachment, enforcement and perfection. Perfection is particularly important because, in the event of the insolvency of a grantor, any unperfected security interests that exist in relation to the grantor's assets are vested in the grantor, and a secured party that has not perfected its rights loses that security interest. Once a security interest is perfected, there are two general rules that apply: first, perfected interests take priority over unperfected interests; second, perfected interests take priority in the order of perfection. Although there are exceptions to these rules, including (importantly) under the transitional provisions, all the applicable rules are contained within the PPSA.
The PPSA contains numerous provisions that particularly affect intellectual property rights holders. For example, it provides that a registered security interest over an IP license continues to exist when the underlying licensed IP is transferred by its owner (§ 106). Unless the parties have contracted out of §106, a licensee will be able to grant security interests in an IP license in favor of a third party whose security interest can then be registered by that third party.
The PPSA also contains provisions relevant to security interests in intellectual property in overseas jurisdictions, such as foreign patents. Where the grantor of the security interest is located overseas, the security interest is generally governed by the law of the grantor's jurisdiction, and not by the PPSA.