[Foundation-l] what do we do in the event the Foundation fails? - Re: Pol...

[Kelly Martin]

On 4/18/07, Ray Saintonge <saintonge at telus.net> wrote:
> Unlike the servers, these are intangible assets.  As such the physical
> seizure of the assets would be impossible.  To say that all agreements
> would suddenly become void would be unworkable.  One would presume, that
> these events would reflect situations where the chapters are still
> financially sound.
>
> >It would be a very odd creditor which accepted an old agreement that
> >"in the event of us folding we will transfer this outright to such and
> >such" as still binding, surely?
> >
> The transfer of rights would have taken place long before there was any
> difficulty.  The creditor would have no choice.

A trademark license not made irrevocable by consideration is revocable
upon notice.  I do not believe the chapters currently pay the
Foundation anything for their trademark use rights, which means the
Foundation -- or its legal successor -- may revoke those rights at any
time.  A successor possessor of those marks would merely have to send
legal notice to each chapter revoking the licenses in order to legally
terminate the right of each chapter to use the Foundation's marks.
There is no transfer of rights -- and in fact the Foundation may not
legally transfer its trademark rights to any foreign chapter, or to
any domestic or foreign entity other than another charitable entity,
without prior IRS approval.

In addition, bankruptcy voids contracts; the trustee could easily void
the chapter's license contracts even if made nonrevocable by
consideration, in order to create value for creditors.

Kelly