Factoring Companies Guidebook

Definition

A copyright is where there is an exclusive legal right to control ways in which material is being used or adapted. Patents are documents obtained giving an exclusive right to make or sell an invention.

See also: - "Licenses"

Concerns

The misuse of intellectual property rights, patents, copyrights and trademarks may lead to possible litigation and the book debt being uncollectable. On a wider scale, any claims for misuse may result in the demise of the company. These patents etc. may also need to be registered internationally to avoid both misuse and possible litigation overseas.

Identification

Review terms and conditions of sales and purchase. Consider the nature of the product, its potential exclusivity (e.g. own-brand) and whether it uses new technology or is a completely new product to the market. Enquiries should be made of the Client as to whether they are aware of and/or have supplied in contravention of any such registration.

Treatment

Any debts where we are not satisfied that they are free of any patents etc. or that the necessary authorities have been obtained should not be funded. Unless we have satisfied ourselves as to the existence and adequacy of any insurance to cover potential clauses, we should consider whether or not to offer a facility, even where sales concerned may compromise a relatively small part of the total turnover.

Example of Terms and Conditions

"The Seller shall protect, indemnify, and hold harmless the Purchaser and its Associated Companies, against any and all liability, loss, cost or expenses by reason of any claim, action or litigation in respect of the alleged or actual infringement of any patent, copyright, trademark, or other intellectual property rights, foreign or domestic, resulting from the use or resale of goods, the subject matter of the Purchase Order, or any part thereof.