In a prior series of posts, we discussed issues relating to intellectual property indemnification, including some exceptions, remedies, and allocation of liability. Given that these provisions often involve taxing negotiations and that many technologies have become intertwined, below we explore some nuanced—and frequently sticky—issues regarding third-party products and how they can be resolved.
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS
With more than 40 webinars total, the annual Morgan Lewis Technology May-rathon continues. We thought these particular webinars were especially timely with regard to topics we follow in Tech & Sourcing @ Morgan Lewis:
- AI and Copyright: Who’s That Author Behind the Computer?: Tuesday, May 26 at 12:30 pm ET/9:30 am PT
- Global Privacy Issues: Thursday, May 28, at 11:00 am ET/8:00 PT
When responding to requests for proposals (RFPs), vendors should be conscious that they might be disclosing highly confidential or commercially sensitive material to the potential customer, with no guarantee of securing the proposed contract. Such information could, without any restrictions, be used by the potential customer to assist the vendor’s competitors or to develop solutions in-house.
In light of this, prudent vendors should carefully consider what legal protections they include in their RFP responses alongside operational and commercial details. We have set out some key considerations below.
The US–China trade deal signed on January 15 aims to strengthen intellectual property protection for US intellectual property holders.
The deal increases the scope of actors liable for trade secret misappropriation to include all natural persons, groups of persons, and legal persons. The deal also enumerates additional acts constituting trade secret misappropriation, such as electronic intrusions and a breach or inducement of a breach of duty not to disclose information that is secret or intended to be kept secret. To further strengthen the protection of trade secrets, the deal provides that “China shall prohibit the unauthorized disclosure of undisclosed information, trade secrets, or confidential business information by government personnel or third party experts or advisors in any criminal, civil, administrative, or regulatory proceedings conducted at either the central or sub-central levels of government in which such information is submitted.”
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