US software supplier Karum sues Fisher and Paykel Finance alleging intellectual property infringement; Seeks injunction and damages

US software supplier Karum sues Fisher and Paykel Finance alleging intellectual property infringement; Seeks injunction and damages

By Gareth Vaughan

Fisher & Paykel Finance is defending allegations in the High Court from a Californian software provider that wants an injunction to stop the consumer lender from using parts of a credit management system that it says incorporates its intellectual property.

The case has been taken by San Francisco-based Karum Group LLC, formerly known as Credit Management Services Inc, which has Queen's Counsel Julian Miles in its corner. Karum is also seeking an unspecified amount of money in damages.

Fisher & Paykel Financial Services Limited, ultimately a subsidiary of Fisher & Paykel Appliances Holdings Limited as is F&P Finance, is named in the action. Defending F&P is another QC, former Rhodes Scholar Alan Galbraith.

F&P Finance, which has just launched a new prospectus for the issue of up to NZ$300 million worth of first ranking secured debenture stock, says it is "vigorously" defending itself.

The six to eight week case is currently underway in the High Court at Auckland under Justice Rodney Hansen.

"The software supplier (Karum) has sought a number of remedies including an unspecified amount of damages. If found liable, damages could be awarded against Fisher & Paykel Financial Services Ltd as the relevant party to the proceedings. It is expected that if any such costs arose, they would be met by Fisher & Paykel Financial Services Ltd or its parent company," F&P Finance says.

"The software supplier has also sought an injunction to restrain Fisher & Paykel Financial Services Ltd from using aspects of the credit management system that the supplier alleges incorporates its intellectual property."

On its website Karum says it has provided private label credit products and services for more than 20 years to some of the world’s biggest retailers. These have enabled them to increase sales, boost gross margin return on investment and customer loyalty, it says.

"With our innovative suite of services ranging from application processing, transaction authorisation and customer service, we provide all of the necessary functions for companies to quickly, easily and cost-effectively manage a credit card programme," Karum says.

F&P Finance operates the Q Card, which it describes as a lifestyle card that's a credit card with fixed instalment and revolving credit purchase options, and the Farmers Finance Card.

F&P Finance, which has some of its deposits guaranteed by the extended Crown retail deposit guarantee scheme until December 31, says whether the court will grant an injunction depends on whether it determines liability for F&P Financial Services Ltd, and then whether it decides an injunction is an appropriate remedy for Karum in the circumstances. F&P Finance says its board believes that if an injunction is granted, the credit management system should be able to be amended to remove any elements found to be infringing in a "reasonable" period.

"If this was unable to be achieved, the proceedings could have a material adverse impact on the operations and financial position of the Charging Group (F&P Finance and its guaranteeing subsidiaries) until replacement software was introduced."

A spokesman for F&P Finance's whiteware making parent, the sharemarket listed F&P Appliances, said the proceedings wouldn't have a material adverse effect on the group's operations or financial position. F&P Finance is expected to provide all, 100%, of F&P Appliances' first-half year earnings before interest and tax in its current financial year.

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