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

The terms “reseller” and “distributor” are often used interchangeably to describe entities that purchase goods or services from a manufacturer and then distribute or resell such goods or services to retailers and consumers. However, there are some key differences between a distributor and a reseller and important issues to consider in agreements with resellers and distributors.

The Clearing House (the oldest banking association and payments company in the United States) recently released a model agreement as a voluntary starting point to facilitate data sharing between financial institutions and fintech companies.

The model agreement is intended to provide a standardized foundation that speeds up data access agreement negotiations; as the Clearing House notes, “[L]egal agreements between banks and fintechs have sometimes taken 12 months or more to be developed and finalized and have become a significant bottleneck to API adoption.” Additionally, the model agreement is designed to reflect the Consumer Financial Protection Bureau’s consumer protection principles on data sharing and aggregation, providing confidence to the contracting parties that the terms address key regulatory issues.

As mentioned in our recent blog post, Morgan Lewis, led by technology, outsourcing and commercial transactions partner Mike Pierides, hosted a roundtable on aviation technology contracts and issues on November 14 at the PSS2019: Retail Excellence conference. The roundtable included representatives from airlines, airline industry professionals, and technology suppliers.

The roundtable discussion focused on how industry stakeholders manage their passenger service systems (PSS). During the feedback session, Mike noted that his roundtable group’s discussion inevitably centered on the challenges that airlines and suppliers face with this process, and talked about some upfront problems that can occur when entering into a PSS relationship. Namely, the RFP process typically places significant weight on obtaining the lowest price at the expense of both the quality and the scope of that particular PSS relationship, which causes tension among an airline’s procurement, legal, and other departments.

As mentioned in our recent blog post, the National Collegiate Athletic Association (NCAA) had been steadfast in its opposition to California’s recently enacted Senate Bill 206, known nationally as the “Fair Pay to Play Act,” which aims to allow collegiate student athletes to benefit financially from the use of their name and likeness and enter into licensing contracts.

On Tuesday, however, in a stunning reversal of course, the NCAA released a statement that their board of governors "voted unanimously to permit students participating in athletics the opportunity to benefit from the use of their name, image, and likeness in a manner consistent with the collegiate model." This concession by the NCAA has opened the door for student athletes to earn millions of dollars through license and endorsement deals.

California has become the first state to allow collegiate student athletes to benefit financially from the use of their name and likeness and to enter into licensing contracts by recently passing Senate Bill 206, a bill known nationally as the “Fair Pay to Play Act.” But, we recommend holding off on preparing templates for student athlete license and promotional agreements for now; the legislation will undoubtedly face zealous resistance from the National Collegiate Athletic Association (NCAA) in the time before the law takes effect.

On September 30 the California Senate enacted Senate Bill 206, which would effectively end amateurism for NCAA athletes and therefore is a game changer for the NCAA, which currently prohibits college athletes from receiving compensation. The California law does not require colleges to pay athletes a wage, but it allows athletes to procure business and sponsorship deals.

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

In this Contract Corner, we are highlighting considerations for drafting sublicense provisions in the context of an Intellectual Property License.

  • Definition of Sublicense. A sublicense in the context of an IP license is any agreement where the licensee grants a third party rights to any of the licensed IP. This provision is often overly broad, but can be tailored to include standard exceptions (e.g., ordinary course agreements with End Users, distributors, etc.) in order to avoid an overly broad definition and to make sure that the royalty calculations are clear. It is also important to clarify the definition of End User in the sublicensing context, and to note that the sublicensee (or one of its affiliates) could be an End User if it uses the licensed IP for its own internal purposes.

In 2018, the esports industry experienced remarkable growth. Poised to become the next multibillion-dollar industry, the esports industry has become a part of mainstream sports. For example, the League of Legends World Championships attracted almost 100 million unique viewers for the finals. In comparison, the 2018 Super Bowl saw viewership numbers of 103 million. According to a major sports news network, more than 50 colleges now have varsity esports programs. Esports revenue grew to $865 million in 2018, according to Newzoo, a global leader in games and esports analysis, and Newzoo projects that the global esports market will exceed $1.6 billion by 2021.

The Hatch-Goodlatte Music Modernization Act was signed into law on October 11, 2018. The act has been termed a music industry peace treaty of sorts, as it is designed to address years of issues and compromise between music streaming technology companies, such as Spotify, and artists and record labels. The act had unanimously passed the US House of Representatives and Senate earlier in 2018.

As 2018 comes to a close, we have once again compiled all the links to our Contract Corner blog posts, a regular feature of Tech & Sourcing @ Morgan Lewis. In these posts, members of our global technology, outsourcing, and commercial transactions practice highlight particular contract provisions, review the issues, and propose negotiating and drafting tips. If you don’t see a topic you are interested in below, please let us know, and we may feature it in a future Contract Corner.