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Capital Idea

Fashion houses understand the value of protecting their creations to the (somewhat limited) extent provided by law, even if that means focusing on trademarks rather than the designs themselves, and many emerging designers quickly learn the same lesson. 

Now WWD reports on a new trend that makes intellectual property even more valuable -- the increasing willingness of factoring companies to lend against the value of the trademark or brand itself.  Traditionally, factors lend against accounts receivable, thus providing the necessary cash for, say, a designer with retail orders to purchase fabric and pay for production and shipping.  Once the clothing reaches stores, consumers (hopefully) purchase the items.  The designer finally receives a check, the loan gets repaid.  As reporter Lisa Casabona notes in the case of loans against IP:

Generally speaking, making sure the loan is protected is not much different from the preparation that goes into lending against other assets such as receivables, inventory, warehouses, real estate or equipment, sources said.  The specifics are different because of the nature of intellectual property assets.

"The risk is more because you are in theory lending against intangible assets which must maintain that intangible value," said [Andrew Tananbaum, president and CEO of Capital Business Credit].

In other words, now more than ever intellectual property is the cake that you can have and eat, too.  Put the trademark on the label and sell it to consumers, use the trademark as capital for a loan, and perhaps one day sell the trademark itself and let someone else worry about management while you design for the runway.  If only real cake were similarly renewable (minus the calories, of course).

(Once again, thanks to Hokusai for the counterfeit cake!)