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.
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS
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.
In Part 1 of this series, we provided an overview of data (or knowledge) commons and some key issues to consider, but how does one actually create and manage a data commons? To find your feet in this budding field, build on the theoretical foundation; address the specific context (including perceived objectives and constraints); deal with the thorny issues (including control and change); establish a core set of principles and rules; and, perhaps most importantly, plan for and enable change.
You may have heard of the “tragedy of the commons,” where a resource is depleted through collective action, but knowledge is different from other resources—knowledge can be duplicated, aggregated, integrated, analyzed, stored, shared, and disseminated in countless ways. Given that knowledge is a critical resource for seemingly intractable problems, the opportunity of the commons (or the tragedy of the lack of commons) is worth thoughtful consideration.
Imagine that you or a loved one is suffering from a terminal or debilitating disease and that data and knowledge are out there, waiting to be combined and harnessed for a cure or a transformational treatment. Imagine that self-interest (including attribution), legal restrictions (including intellectual property protections), inertia, complexity and difficulty of collective action, and other weighty forces are between you and that breakthrough discovery. Though not a new concept, commons have been garnering attention lately as an alternative framework for catalyzing groundbreaking research and development, particularly when relevant data and knowledge are scattered and particularly in the life sciences community. But before we all throw away our patents and data-dump our trade secrets, there are some thorny aspects to governing a data (or knowledge) commons. For example:
- A commons is essentially its own society. Anyone who has been part of a homeowners’ association knows that collective governance is almost always muddy. Aligning incentives, objectives, and values can be challenging.
- Founders may have trouble relinquishing control or enabling change. Participants may become confused or upset if rules or priorities change.
- Commons are not as well understood and tested. They must coexist with, and within, other systems that may be more rigid and rules-based. Participants may be logistically, intellectually, and otherwise tied to traditional methods and may prefer semi-exclusive zones rather than open collaboration.
- It may be difficult to measure the effectiveness or value of commons.
- Policing activities (e.g., authentications or restrictions) may be burdensome. And once the cat is out of the bag, it’s difficult to undo uses or disclosures.
- Commons managers may not be willing to take on certain responsibilities or liabilities that would make participants more comfortable.
- Different types of information and tools have different levels of sensitivity and protection. Certain information, like personal data, is highly regulated.
Scholars have taken theoretical frameworks built for natural resources and adapted them to the data commons setting. Key findings include that data commons must be designed to evolve and that communities with high levels of shared trust and values are most likely to succeed. Whereas governance through exclusivity (e.g., patents) is useful when trust levels are low, a resource sharing governance model (e.g., commons) can be effective when trust levels are high.
If you’d like to know more:
- We will be hosting a webinar with one of the aforementioned scholars—Professor Michael J. Madison, faculty director at PittLaw—on Tuesday, December 18, 2018, from 12:00 pm to 1:00 pm ET. Register and join us for the discussion.
- In a subsequent post, we will provide some tips and considerations with respect to drafting policies, standard terms, data contribution agreements, and other governing documents for data commons.
Knowledge sharing has long been an important element of academic research. And now collective sharing and governance of data assets throughout the scientific community, including for-profit participants, is gaining momentum. During their webinar, Out in the Open: The Knowledge Commons Framework, Emily Lowe, Ben Klaber, and Professor Michael J. Madison, faculty director at PittLaw, will discuss issues related to knowledge commons. Topics will include the following:
- A fundamental overview of knowledge commons, including the framework’s strengths and weaknesses
- Standard requirements regarding data contribution, access, use, sharing, protection, and attribution
- How to decide if a knowledge commons framework is right for your business, and if so, how to implement it successfully
Morgan Lewis partner Barbara Melby, the leader of our technology, outsourcing, and commercial transactions practice, has been invited to present at an upcoming Practising Law Institute (PLI) event, Outsourcing 2018: ITO, BPO and Cloud, in New York City. Barbara’s one-hour presentation will take place Friday, November 2, at 11:15 am. She will discuss intellectual property 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 presentation is part of a two-day PLI outsourcing event November 1–2 at the PLI New York Center, 1177 Avenue of the Americas (2nd floor), New York. You can also access the event via webcast and various groupcast locations.
To register, visit the Outsourcing 2018: ITO, BPO, and Cloud event page.
A frequent point of contention between parties negotiating the allocation of risk related to intellectual property rights in connection with the acquisition of intellectual property is the interplay between the warranty and indemnification sections. Below we break down what to look for in these sections and how minor changes in the language can significantly change the rights a party is granting or receiving.
Intellectual Property Warranties
An intellectual property warranty generally provides that the intellectual property rights being licensed or assigned constitute all intellectual property rights owned or controlled by a party prior to the effective date of the transaction, and that those rights are all the rights necessary for the conduct of the business (as it is currently conducted) after the effective date of the transaction. A warranty may also go on to say such intellectual property does not infringe third-party intellectual property rights. The following versions of this clause demonstrate how this clause can be worded to strengthen or weaken the warranty.
In Part 1 of this two-part series, we discussed issues related to the defense and indemnification aspects of intellectual property indemnification. In this second part, we will review the exceptions, remedies, and liability limitation related to this common provision.
As described in Part 1, both technology providers and users will want providers to be responsible for claims that the technology infringes the intellectual property rights of a third party. However, providers will want to limit such obligations where actions by users or other third parties cause infringement. Providers will frequently attempt to carve out of IP indemnification clauses infringement claims based upon
- use of the technology in combination with other hardware, software, or data;
- unauthorized use;
- modifications to the technology; or
- failure to incorporate the latest updates or upgrades.
As a follow-up to last month’s posts regarding contract provisions impacting intellectual property ownership, in this month’s Contract Corner we review issues regarding intellectual property indemnification, a provision in practically every agreement involving intellectual property or technology.
IP indemnification clauses are the most common indemnification provisions in contracts because typically, both parties need the provision. Users of technology licensed or otherwise received from another party will demand that technology providers take care of any third party IP claims that would prevent (or increase the cost of) use of the technology. On the other side of the transaction, IP owners will want to control any IP litigation against their technology and avoid users settling such claims and giving up valuable IP rights (and it is likely the owner is already facing such IP claims directly).