TECHNOLOGY, OUTSOURCING, AND COMMERCIAL TRANSACTIONS
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS

Companies that use app-based technology platforms to connect consumers directly with service providers have faced an important question of whether the individuals providing the services are contractors or employees. California recently passed legislation that requires companies to treat contract workers that perform core company functions as employees.

A recent Delaware court ruling found an agreement to be unenforceable despite being executed by each of the parties via “orphan” signature pages because there was insufficient evidence that the parties had a meeting of the minds as to which version of the contract they were signing. While the facts of this case could be characterized as a “perfect storm” of circumstances to invalidate the commonly accepted practice, it is worth noting the court’s findings for any takeaways that could help you avoid being blindsided by the invalidation of a contract.

The California legislature passed five bills on September 13 to amend and clarify the scope of the California Consumer Privacy Act (CCPA). If the amendments are signed by the California governor by the October 13 deadline, they will become part of the CCPA, set to take effect on January 1, 2020. A LawFlash by Morgan Lewis partner Reese Hirsch and associates Kristin Hadgis, Lauren Groebe, and Terese Schireson discusses the key proposals in each amendment, such as:

Partner Barbara Melby, the leader of our technology, outsourcing, and commercial transactions practice, will be presenting “Intellectual Property Issues in Outsourcing” at Practising Law Institute’s (PLI’s) upcoming Outsourcing 2019: Innovation and Disruption program in New York. Barbara’s one-hour presentation will take place on Thursday, October 31 at 1:15 pm ET. She will discuss intellectual property (IP) issues in outsourcing, including the following topics:

  • Recognizing and avoiding common IP pitfalls
  • Copyright, patent, and trade secret issues from vendors’ and customers’ perspectives
  • IP representations, warranties, and indemnities in outsourcing transactions
  • Open source considerations
  • IP issues in cloud deals

The EU Council Presidency on September 18 put forward to member states an 88-page compromise proposal on the Eprivacy Regulation with considerable changes and amendments. There are several proposed changes to the provisions on email marketing and cookie use that we think readers may find relevant. Here is the proposal of the Finnish Presidency. The main areas that were modified by the current proposal are:

  • Email marketing
  • The definition of direct marketing
  • Procedures around direct marketing calls
  • End user consent for cookies

Many contracts in the United Kingdom and elsewhere contain amounts that are indexed to the Retail Price Index (RPI). Morgan Lewis partner Bruce Johnston recently published a LawFlash outlining how recent changes to the UK RPI could impact contracts that leverage the index.

More broadly, many clients take for granted that indexes published by third parties (for example, the Consumer Price Index in the United States) generally reflect the economic reality of their transactions. We recommend that before simply referring to a particular index, lawyers take a few extra steps to add value for their clients.

  1. Look up the index. Does it still exist? Consider adding a mechanism into the agreement that allows a new index to be selected in the event the chosen one is discontinued.
  2. Has the index been around for a while? If not, consider using something that has.
  3. Has the index changed recently? If so, alert your client.
  4. Are there other indexes that may more accurately address the economics of the transaction? For example, is the Producer Price Index potentially more applicable than the Consumer Price Index?

Read the full LawFlash >

A recent LawFlash by Morgan Lewis partners Ksenia Andreeva and Vasilisa Strizh and associate Anna Pirogova discusses a draft law proposed in Russia that would introduce heavy fines for violations of Russia’s data protection law and a variety of internet activity laws.

The primary federal data privacy law in Russia, On Personal Data, dated July 28, 2006 (the Personal Data Law), applies to “personal data operators,” which are entities that organize and carry out the processing of personal data and determine the purpose of individuals’ personal data processing. The proposed draft law, On Amending the Code of Administrative Offences of the Russian Federation, relates to the “localization requirement” of the Personal Data Law, which creates on obligation for personal data operators to collect, store, and otherwise process personal data of Russian citizens using databases and servers located in Russia.

Cybersecurity continues to be an issue at the forefront of many of our contract negotiations. Though not typically included in the “data security” section of an agreement, the level and scope of cyberinsurance coverage often plays an important factor in the discussions between customer and vendor.

On this topic, Morgan Lewis partners Mark Krotoski and Jeffrey Raskin will present an upcoming webinar as part of our firm’s Cyber Insurance Webinar Series to discuss ongoing developments in the cyberinsurance space, with a focus on the critical factors your company can consider as part of its overall cybersecurity protection strategy. The one-hour webinar, Cyber Insurance: Is Your Company Covered?, will take place on Tuesday, September 17, at 2:00 pm ET.

The January 1, 2020, deadline to comply with the California Consumer Privacy Act (CCPA) is fast approaching. Signed into law in the summer of 2018, the CCPA creates a variety of new consumer privacy rights and will require many companies to implement policies and procedures to manage and comply with new consumer-facing responsibilities. Catch up on the details of the CCPA in our previous post, this LawFlash, and the Morgan Lewis CCPA resource center.

An IAPP article by Annie Bai and Peter McLaughlin recently caught our attention, as it discusses the business risks of complying with the “verifiable consumer request” requirement under the CCPA. Under the CCPA, a California consumer may (1) request that a covered business provide access to the consumer’s personal information or (2) request that his or her personal information be deleted. Upon receiving such a request, the covered business must verify the identity of the requesting individual and respond. However, there is not much clarity in the CCPA regarding how a covered business must verify an individual’s identity.

When we represent customers in outsourcing and managed services transactions, we spend a significant amount of time drafting the exhibits for transition, which is typically a major project in and of itself. In order to help clients think about the major components of transition, we often provide the following checklist of common workstreams to facilitate our discussion.

  1. Governance – Governance is an overarching workstream that spans all phases of transition. A key component is the formation of a transition management office that is responsible for managing the overall transition (including performance and risk management) and coordinating with the company’s governance organization.
  2. Planning – Detailed design and implementation planning is critical to ensuring timelines are integrated and met, with all dependencies considered. Plans typically include the responsibilities of each party, anticipated completion dates, and acceptance criteria.