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

Ed Hansen, Val Gross, and Morgan Richman will run a highly interactive two-part program, “How to Make Complex Contracts and Negotiations Work: Tips and Practices You Can Use Today,” at the Eastern Regional SIGnature Event. The program will guide attendees through complex contracting and collaborative negotiating, providing actionable strategies that can be used in real-world scenarios right away.

In the first session, the team will define and deconstruct "complex" contracts. Attendees will learn techniques to simplify contracts and will learn how to transform a "bad" contract into a user-friendly document that constituents will want to use. The second session will focus on hardcore collaborative negotiating techniques. Using a scenario-based approach, participants will learn the hard skills necessary for building a collaborative negotiating environment, including how to avoid barriers to collaboration, how to achieve alignment, and how to address FUD—fear, uncertainty, and doubt.

Open source programs are becoming a best practice in the technology, telecom/media, and financial services industries. Companies are establishing open source best practices to streamline and organize the way their employees use open source, focusing on long-term business plans. Since open source, a collaborative development process, varies so greatly from traditional software practices (i.e., proprietary and closed), companies are creating their own open source programs and policies to manage how it is used and how it can work best for the company’s long-term goals. Naturally, large technology companies are leading the way in establishing open source best practices, but open source is becoming commonplace for both tech and non-tech companies.

Open source programs are typically created by a company’s software engineering or development department for informal use and then eventually grow to a “formal” program with a collection of policies and guidelines. These policies may include open source contributions, a list of acceptable licenses, and the use of OS code.

When an inventor of technology who is also a university employee wants to commercialize university-developed technology, it is customary for the university and the inventor to “spin out” the technology via a license agreement to a newly created company (a licensee company) that sets forth the terms of the license, including any necessary milestones for advancing the technology, restrictions on the use of the technology, and the royalties and other financial terms applicable to the licensing and commercialization of the technology.

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 audit section in a services agreement contains the provisions that specify a party’s right to access and review another party’s information in order to determine such party’s compliance with the agreement. Depending on the scope of audit rights, the audit section can range from a single paragraph to an entire exhibit to the contract.

Many considerations go into drafting appropriate audit rights, including the types of services that the customer is receiving, and the industry in which the customer’s business operates. In many cases, the customer is the auditing party and the service provider is the audited party, but there are situations where the roles will be reversed. Below is an overview of several key issues to consider when drafting audit rights for services agreements.

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.