New Zealand: The Personal Property Securties Act 1999 (PPSA) and Intellectual Property

Anyone buying, selling or licencing intellectual property (IP) assets in New Zealand or offering or taking them as security should be aware of the impact of the PPSA on those arrangements.

This paper addresses the impact of the law on personal property securities on IP assignments, licences and other transactions involving IP assets and gives some practical advice to those involved in such transactions.

The PPSA enables a party who has a registrable security interest over personal property to register that interest. A registered interest generally gives that secured party priority over the underlying personal property and enables them to enforce their rights in that property against third parties such as a liquidator. As a result, a secured party can repossess the personal property if the debtor breaches the terms of their security agreement with the secured party, regardless of whether the personal property has been on-sold.


The PPSA took effect in 2002 and governs "security interests" in "personal property".

"Personal property" is defined in the PPSA as including intangibles. Intangible property includes IP such as trademarks, patents, designs and copyright.

The PPSA defines a "security interest" as an interest in personal property (the "collateral") that in substance secures the payment or performance of an obligation without regard to the form of the transaction or the identity of the person who has title to the collateral.

The PPSA takes a functional approach to determining what constitutes a security interest. Under the PPSA, ownership is largely irrelevant and a person can no longer rely on title to protect their interest. The key question is whether or not the interest secures payment or performance of an obligation.

Anyone who has a security interest may register, and thereby "perfect", that interest on the Personal Property Securities Register (PPSR) which is a public online noticeboard where people can search and view information held online and in real time.


The ambit of the PPSA extends well beyond typical "secured loans". Some examples of security interests that may arise in IP transactions, and should therefore be registered on the PPSR to protect the secured party, are:

  • A security interest over an IP licence: While an IP licence is not itself a security interest, the licence does constitute personal property over which a security interest can be granted or taken if the interest in the IP licence secures payment or performance of some kind. Accordingly, an IP licence is not registrable on the PPSR, but if the licensor or licensee grants a security interest over that licence to a financier, for example, the security agreement evidencing that grant is registrable.
  • An assignment of IP with a reversionary interest: If IP is assigned on terms that provide for a transfer back to the original owner either on the expiration of a period of time or on default of the other party, this may amount to a security interest. These types of arrangements are sometimes used in place of an exclusive licence and are common in the film and music industries in respect of copyright works.
  • Joint ownership: The joint ownership of IP should be reviewed in light of the PPSA. Any part owner who is not the registered proprietor of the IP on, for example, the trademarks register, may have a registrable security interest in that IP.
  • Long term leases: If any property (e.g. prototypes) is supplied for an indefinite period, or for a period greater than 12 months, that supply may give rise to a security interest (or be a "deemed security interest" under the PPSA) and therefore be registrable.
  • Royalty streams: It may be possible for a security interest to exist over the proceeds or royalties payable under a licence as a separate form of security interest to the licence itself. The term "proceeds" is defined broadly enough in the PPSA to capture such payments. The right to receive those payments could amount to a security interest that can be registered on the PPSR in addition to, or as alternative to, the licence.


Owners and licensors should consider the following issues when dealing with IP in the context of the PPSA:

  • Prohibition on granting a security interest: Licensors (and IP owners) should ensure that the licence agreement prohibits the licensee from granting a security interest in relation to the licensed IP. A breach of this obligation could be grounds for termination, and consideration should be paid as to whether the breaching party should indemnify the licensor for costs and losses arising as a result of the breach.
  • Reversionary right: Ensure that any assignment of IP is on terms that provide for a transfer back to the licensor after a certain time or on certain conditions and then ensure that the licensor's reversionary right is registered on the PPSR.\
  • Related IP: If an IP owner intends to give security over personal property that is connected with IP, or has IP integrated within it (e.g. equipment containing embedded software), the IP owner must ensure that they have not already granted a security interest over the relevant IP to another financier.
  • Jointly owned IP: Owners and licensors should thoroughly review any IP joint ownership arrangements to ensure they are adequately protected.
  • IP developed with licensed IP: If a licensor licenses IP that the licensee intends to use for the purpose of developing new IP then the licensor should consider whether it would be appropriate to include a retention of title clause in the licence agreement. Doing so would enable the licensor's security to extend to any IP that is developed through the use of the licensed IP. Failing to do so may inadvertently give rights in that newly developed IP to banks or financiers, for example, who have an "all present and after acquired interest" in the assets of the licensee if the licensee were to become insolvent.
  • Review registrations: Instigate a procedure for regularly reviewing the PPSR for any security interests registered against the licensor or owner to ensure that all registrations are valid.


A licensee may wish to conduct a search of the PPSR for all security interests registered against the licensor (and IP owner if different). A licensee should seek to restrict a licensor's ability to grant a security interest over the IP to a third party because if it does and the licensor becomes insolvent a secured party may exercise its power of sale over the licensed IP. In such circumstances, a licensee will generally not be able to enforce their rights as licensee (and may therefore lose their ability to use the IP) unless the new purchaser has notice of the licence.


Financiers should be aware of the following PPSA related issues when considering advancing credit in situations where IP exists as a means of security:

  • Check for existing registrations: Before taking security interests in IP or IP licences, financiers should check the PPSR to ensure that there are no existing prior security interests.
  • Audit security interests: Financiers should regularly undertake an audit of all security interests they hold over IP and IP licences in New Zealand and elsewhere to ensure that registrations are up to date.
  • Use serial number: If the IP covered by a financier's security interest has a serial number, the serial number should be recorded on the PPSR to enable third parties to adequately identify that financier's secured interest in the collateral.
  • Notification of debtor changes: Financiers should impose a positive obligation on the debtor to notify them of any change in the name or address of the debtor (along with an appropriate indemnity) as a financier's registered security interest may not be valid if the registration does not reflect accurate details of the debtor.


  • Importance of Registration: The PPSA established rules for the creation, priority and enforcement of security interests. It introduced the concept of "perfection" which provides the mechanism to best protect a security interest. Security interests that are perfected take priority over other security interests subject to the specific priority rules in the PPSA. Importantly, because IP is intangible and cannot be perfected by possession, a security interest over IP can only be perfected by registration on the PPSR.
  • Dual Registration: Secured parties should ensure they register their interest on both the PPSR and, where possible, the relevant underlying IP register in all relevant jurisdictions to ensure they get the maximum protections available from both. Some jurisdictions (for example, Australia) offer additional protections to those persons whose interest is registered on an IP register than they would get by registering under the PPSR alone.
  • Competing Priority of Security Interests: The general rule under the PPSA is that the first in time to register their security interest has priority. This is regardless of whether a security interest relates to specific named assets of the debtor or is an "all present and after acquired property" interest. It is common for banks to register an "all present" interest over the assets of a debtor but if a licensor, for example, registers their security interest over specific assets of the debtor before the bank registers its security interest, then the licensor will generally have priority over the bank if the debtor becomes insolvent.
  • Timing of Registration: While a security interest has to be attached for it to be perfected, perfection occurs regardless of the order in which attachment, registration or possession occurs. Accordingly, anyone with a security interest in IP should register that interest on the PPSR as soon as their security agreement comes into effect to ensure they get the best priority available.
  • Conflict of Laws: The territorial nature of IP gives rise to the potential for conflict of law issues. While the PPSA provides that the validity of a security interest is governed by the law of the jurisdiction where the debtor is located when the security interest attaches, conflict of law rules still apply and can give rise to a number of issues where parties are in different jurisdictions and/or the IP is registered in more than one jurisdiction.

Duncan Cotterill can assist you in assessing what intellectual property security interests should be registered, drafting appropriate protections around your intellectual property, searching the PPSR and with the registration of intellectual property rights.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions