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

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.

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.