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

The UK government is considering responses to its proposed reforms to auto-subscription rules for consumer contracts, as part of a broader consultation on reforming UK competition and consumer policy.

Many organizations have longstanding sustainability initiatives for reducing waste through efforts such as recycling or reductions in printing. However, organizations are now also looking to their use of technology to help improve the sustainability of their operations.
As 2021 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.

The Court of Justice of the European Union (CJEU) has held in Case C-410/19 The Software Incubator Ltd v Computer Associates (UK) Ltd that the supply of software by electronic means, where accompanied by the grant of a perpetual user license in return for a fee, could constitute a “sale of goods” for the purpose of defining a commercial agent under the EU Commercial Agents Directive (the Directive).

Companies are transforming legacy systems, implementing automation and artificial intelligence tools, embedding digital capabilities into their products, shifting to cloud solutions and leveraging technology to better connect to their customers, personnel, and third parties, all at an unprecedented pace. The focus on businesses to get to market faster, reach a broader audience and provide real-time interaction has in turn put pressure on legal and sourcing documents to keep up. The complexity and volume of the numbers of projects (and contracts) can be daunting — especially for companies that have not yet elevated the importance of the technology law function within their organizations.
During the last year, we have seen a significant shift to “as a service” models and cloud solutions, as well as heightened attention on outsourcing as a strategic business tool to enable scalability, improved service, and accelerated access to in-demand technology and resources. This increased reliance on vendor performance to enable business operations has underscored the importance of implementing a solid service level methodology in order to: establish performance metrics that align with the customer’s expectations and business requirements; measure, monitor, and report performance against the metrics; set out the remedies for service level defaults, including service level credits and termination rights; and agree to events that may excuse performance resulting in missed service levels.
Planning for major service disruptions and disasters, such as prolonged power failures, fires, flooding, and other extreme weather events, is an important element of strategic technology and service agreements.

As discussed in a post from last month, annual spending worldwide on cloud services continues to rise with an expected increase up to $332 billion by the end of 2021, which is an increase from $270 billion in 2020. While the private sector is marching forward with increased reliance on hosted services, US government organizations have followed suit by increasing spending in cloud-based solutions allowing them to capitalize on the cost-savings and innovation gained by SaaS offerings.

Annual spending worldwide on cloud services is expected to increase by 23% in 2021, according to a recent article in The Wall Street Journal, which cites a forecast by IT research and consulting firm Gartner Inc. Since the beginning of the COVID-19 pandemic, businesses have shifted to cloud-based services to support remote work, but businesses are also using the shift in attitudes toward cloud services to move more complex IT needs to the cloud. The article reasons that the push to use cloud services may also be due to the hybrid workplace model that many businesses are adopting, where workers can work both in the office and from home. This model requires that remote workers have access to critical software and infrastructure.
Customers engaging a software as a service (SaaS) vendor often end up using the vendor’s form agreement, which can range from being extremely vendor friendly to middle of the road. Regardless of where it falls on the spectrum, a SaaS vendor’s agreement will most likely contain one or more provisions giving the vendor rights to suspend the services being provided under the agreement. Some common suspension rights we have seen in vendor agreements include suspension rights relating to nonpayment, disruptive use of the services, and violation of law through use of the services.