Tech & Sourcing @ Morgan Lewis

The use of open-source software (OSS) is ubiquitous. Depending on what license governs the type of OSS a company uses and how it uses the OSS, OSS use impacts the valuation of the intellectual property (IP) used by a company or transferred in a merger or acquisition (M&A). Thus, OSS-related representations and warranties have become an integral part of the IP representations and warranties in M&A transactions and financings.

In the era of digital transformation, businesses increasingly rely on software-as-a-service (SaaS) solutions for various operational needs. For a buyer, it is crucial to prioritize data security when negotiating SaaS contracts to safeguard sensitive information and comply with data protection regulations. In this post, we explore the essential data security provisions buyers should consider when entering into SaaS agreements.

Software as a service (SaaS) is a distribution model where the software vendor hosts their software on their own servers, or the cloud, as opposed to the customer purchasing the software for use on their own on-premises servers.

The decision to terminate an agreement cannot be taken lightly. In exercising the option, understanding the key terms of the agreement and necessary steps to effectuate the termination are critical. As we have previously highlighted in past Contract Corners, termination provisions may include a variety of mechanisms built into them and one cannot assume that all termination provisions require the same steps to be taken. When considering a termination, a party must take the time to assess the actual termination rights under the agreement, what, if any, notice period will apply, and whether the termination will result in any payment or other obligations.

In Part 1, we discussed what a dependency in a technology integration is and how to deal with it in a contract. In this installment, we’ll consider how to address the risk of the assisting party not providing required information or assistance.

Whether an organization is adding a new piece of technology to its platform or acquiring a new product to supplement its offerings, the customer (recipient) and vendor (transferor) will need to work together to ensure the successful integration of such technology or product into the recipient’s systems. More often than not, one party cannot do its part without the other party’s assistance, thereby creating a dependency. In this Part 1, we discuss what a dependency is and how to address it in a contract. Check back for Part 2, where we will review remedies available to the parties in case of a breach of any dependency obligations

In any service relationship, continuity of service provider personnel often impacts service quality. Excessive personnel turnover on an account can negatively impact day-to-day operations and the ability to respond to issues. Assignment and management of personnel are primarily business issues that are the responsibility of the service provider. However, there are important provisions that can be included in service agreements that can help address these issues.

Effective management of intellectual property is crucial in the contracting stages of technology projects. Various types of intellectual property can be subject to protection in an agreement and may receive different types of treatment. For example, copyright protection, patent protection, and know-how (trade secrets) are all subject to different rules when it comes to contracting.

A sole and exclusive remedy clause allows parties to a contract to choose specific remedies and relief available under the terms of the agreement. Essentially, exclusive remedy provisions restrict a party's available remedies for specified claims to the remedies set out in the contract and exclude the party from seeking other types of remedies for that action. In commercial contracts, often you will see sole and exclusive remedy clauses in relation to breach of warranty, indemnification, and failure to perform.

In outsourcing, technology, and commercial transactions, cost of living adjustment (COLA) mechanisms linked to price indices are coming under increasing scrutiny with current global inflationary pressures.