Tech & Sourcing @ Morgan Lewis

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.

With the COVID-19 pandemic, many industries experienced a major shift in how the personnel of key suppliers worked, with “nonessential” personnel in large part working remotely. When this shift to remote work first happened (rather abruptly for many companies), security was a critical consideration, but one that was handled in many instances outside the supplier contract, with both parties focusing on keeping business operations going with must-have data and security safeguards in place.

The “shift to the cloud” continues, with analysts making bold predictions regarding the increase of cloud adoption by companies across almost every industry. Cloud solutions offer many cost, innovation, and scalability opportunities. What is often forgotten or considered late in the process, however, is the change in the risk, compliance, and contracting paradigm that arises with the reliance on a third-party cloud provider. If given the time and attention, these changes can be managed and the risks controlled with appropriate diligence and contracting structures.

The COVID-19 pandemic introduced unprecedented challenges, requiring companies to adapt quickly to the way their personnel work, changes in their business offerings, and how they interact with their customers and suppliers. With some time to adjust to the “new normal” of the pandemic (and hopefully soon, the post-pandemic), many companies are looking ahead—with a potential economic downturn being top of mind.

The race to improve, automate, and modernize business operations has led many companies to reexamine their foundational digital platforms to assess whether it is time (or past time) to transform these platforms to better support and keep pace with current and future business needs and leverage state-of-the-art technologies. While the possibilities of platform transformations are exciting—from disruptive functionality and analytics to enhanced user experience—they can also be daunting from a project management, timeline, and cost perspective.

As we discussed in Part 1 of this blog series, many SaaS providers are seizing opportunities to expand their offerings and become a go-to marketplace or network, but their original contract terms and procedures often don’t fit their evolving business models.

As more and more SaaS providers, in digital health, fintech, and other industries, look for ways to integrate with and offer third-party applications (in their quest for powerful network effects), they eventually reach a point where the reality contemplated by their original standard terms and the world (or metaverse) of their now-envisioned business model diverge.

Rights holders are almost always looking for ways to monetize the intellectual property (IP) that they own or license. For owners of rights in popular logos; characters from TV shows, movies, or video games; or similar IP, one way to generate a revenue stream is to enter into merchandise license agreements.