Annie Leibovitz may arguably be the most famous photographer in the world. Her photographs have defined an era; from John Lennon and Yoko Ono on the cover of Rolling Stone to official portraits of Queen Elizabeth II. However, after it was reported that she was forced to take a loan of over $20 million to secure existing debts, it was her financial meltdown that received the most media coverage. Significantly, Leibovitz put up not only her property as collateral, but also the rights to all her current and future snaps until all her financial obligations are met. While this is not the first example of intellectual property being used to secure a loan, its coverage in the media has coincided with significant reforms in Australia to the Personal Property Securities (PPS) Regime.
In the past, the complexity of PPS legislation has discouraged borrowers from using intellectual property to secure loans. However, the proposed reforms aim to simplify and consolidate the current Australian PPS regime by ensuring the rules of priority of competing interests are consistently applied. Significantly, IP rights will be included within definition of “personal property.”
The Personal Property Securities (Consequential Amendments) Act 2009 amends the Design Act 2003 (Cth), the Patents Act 1990 (Cth) and the Trade Marks Act 1995 (Cth) and require security interests in intellectual property to be recorded on the PPS register.
It should be noted that the reforms will introduce several new terms into the IP vernacular, including the American terms “collateral”, “attachment” and “perfection”.
The inclusion of IP in the definition of “personal property” may substantially improve the ability of individuals and businesses to raise capital, and also make secured lending more attractive, accessible and cost-effective. Furthermore, by harmonizing current Australian laws and creating a centralised register, the PPS reforms will significantly change financial dealings and lending in Australia.