Tech & Sourcing @ Morgan Lewis

The UK government published a white paper on March 29 setting out a “pro-innovation” UK regulatory framework for artificial intelligence (AI). The framework centers upon five cross-sectoral principles, of which implementation will be context-specific to the use of AI, rather than the technology itself. The government does not propose introducing a new regulator or any new legal requirements on businesses, instead leveraging existing powers of UK regulators and their domain-specific expertise.

The use of open-source software (OSS) is ubiquitous. Depending on what license governs the type of OSS a company uses and how it uses the OSS, OSS use impacts the valuation of the intellectual property (IP) used by a company or transferred in a merger or acquisition (M&A). Thus, OSS-related representations and warranties have become an integral part of the IP representations and warranties in M&A transactions and financings.

The European Union’s General Data Protection Regulation (GDPR) requires companies to monitor and comply with some of the strictest privacy laws in effect. Now, the European Commission is refocusing efforts and oversight on ongoing investigations under the GDPR. Going forward, companies may want to focus even more intently on their compliance as the EU steps up investigatory procedures.

The decision to terminate an agreement cannot be taken lightly. In exercising the option, understanding the key terms of the agreement and necessary steps to effectuate the termination are critical. As we have previously highlighted in past Contract Corners, termination provisions may include a variety of mechanisms built into them and one cannot assume that all termination provisions require the same steps to be taken. When considering a termination, a party must take the time to assess the actual termination rights under the agreement, what, if any, notice period will apply, and whether the termination will result in any payment or other obligations.

Please join us on Tuesday, February 7, 2023 at 11:30 am to 12:30 pm ET as Morgan Lewis partners Randy Wood, and Nancy Yamaguchi provide a summary of significant market trends in M&A in the technology sector.

In 2023, many companies are looking to get ahead of the issues that are expected to shape the next few years. In our industry outlook, “The Trends—and Traps—That Will Shape 2023,” our lawyers provide a high-level overview of what’s in store for various global industry sectors, highlighting some of the top tech trends and global regulatory developments.

The UK Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) on December 20, 2022, announced fines totaling £48.65 million ($59 million) on TSB Bank plc (TSB) for operational resiliency failures, after an IT upgrade led to customers being unable to access core banking services.

In a recent LawFlash, a team of Morgan Lewis lawyers reviewed the US Securities and Exchange Commission’s proposal for a new rule and rule amendments that, if adopted as proposed, would require registered investment advisers to meet certain requirements when outsourcing “Covered Services.” The rule includes heightened requirements for due diligence, monitoring, and reporting, including amendments to Form ADV.

In any service relationship, continuity of service provider personnel often impacts service quality. Excessive personnel turnover on an account can negatively impact day-to-day operations and the ability to respond to issues. Assignment and management of personnel are primarily business issues that are the responsibility of the service provider. However, there are important provisions that can be included in service agreements that can help address these issues.

As part of our Spotlight series, we speak with Simon White, one of the most senior and experienced technology lawyers in the UK market, who has held roles including deputy counsel, Chief Privacy Officer, and GC EMEA LATAM at Cognizant, one of the largest multinational IT services companies in the world with over 300,000 personnel spanning across five continents. Prior to joining Cognizant nearly 15 years ago, Simon White was a corporate associate at Morgan Lewis.