A new U.S. Postal Service change to the standard terms and conditions that apply to its newly awarded Highway Contract Route (HCR) and Contract Delivery Service (CDS) contracts could be unenforceable, according to David P. Hendel, writing in the Husch Blackwell Contractor’s Perspective blog.

The changes apply to existing CDS contracts as well as newly awarded ones. In an email, the Postal Service asked contractors to sign, without any “alterations or additions,” a contract modification that incorporated the new terms. If the contractor did not so, the Postal Service’s email threatened contract termination, Hendel writes.

He cited problems with the way the changes are presented, including lack of consideration, violation of the implied covenant of good faith and fair dealing, and the legal theory of coercion and duress.

Read the article.

Employees are the engine that drives a manufacturer’s innovations, but employees’ potentially patentable innovations only become the employer’s intellectual property if the proper patent assignment language is used, warns Foley & Lardner in its Manufacturing Industry Advisor blog.

Authors Christopher King and Richard Dancy explain:

“All employees that may develop potentially patentable innovations during the course of their employment should be required to sign contracts transferring ownership of all intellectual property rights to their employer. This may even include factory employees who submit ideas for product improvements through an employee suggestion program. However, if employee patent assignments are not carefully crafted, manufacturers may end up in a nightmare situation – believing they own a valuable patent invented by an employee when, in reality, it belongs to the employee.”

Read the article.

Non-compete agreements are subject to state law, and states vary in their treatment of them. There is no one-size-fits-all non-compete agreement, and the enforceability of a non-compete agreement turns upon the state law under which it is construed, points out a blog post from Knobbe Martens.

A case in point involves two high-end, off-price fashion brands are duking it out over an employee jumping ship, write authors Alexander D. Zeng and Mark Kachner.

“Generally, states that are more willing to enforce non-compete provisions do so for countervailing policy reasons: to prevent trade secret misuse, reduce the cost of trade secret litigation, protect employers’ investments in employees, and favor freedom of contract. The outcome of this lawsuit will be heavily impacted by the state law governing Arcuri’s non-compete agreement.”

 Read the article.

Kilpatrick Townsend & Stockton has published a structured guide to outsourcing in the USA.

The guide covers contract forms, due diligence, duration and renewal, supplier selection, service specifications, charging methods, warranties and indemnities, and ending the agreement.

Authors of the guide, which is published at Lexology.com, are James Steinberg, Joshua M. Benson, Farah F. Cook, Joshua S. Ganz, Julie C. Grundman, Maha Khalaj, Lance McCord, Michelle Tyde, Amanda M. Witt and Vita Zeltser.

Read the article.

Trial lawyers with Jordan, Lynch & Cancienne PLLC scored big defense wins recently for two separate clients, securing a quick summary judgment for The Dow Chemical Company in Texas and prevailing in a jury trial for Union Carbide Corporation in New Orleans.

In the Texas case, MMR Constructors Inc. tried to claim an additional $17 million from Dow after it had already paid MMR for work on its plant in Freeport, Texas. That case ended with a summary judgment for the defense.

And in the New Orleans case, jurors heard three weeks of testimony related to the death of an oil field worker who died of mesothelioma. The jury found Union Carbide and Montello were not responsible.

Read details of the cases.

In contracts about complicated services, the hardest terms to draft appear in statements of work, according to a post on the website of Tech Contracts Academy.

“SoW’s for large projects demand long lists of duties from the vendor,” explains author David W. Tollen. “And usually they’re interwoven with supporting tasks from the customer, along with countless contingencies, assumptions, and exceptions. Putting all those pieces into an effective contract challenges the best drafters. The result is often hundreds of pages of baffling mess. Yet the path to good drafting is surprisingly simple: write outcome-driven descriptions. In other words, describe the technology the vendor will create or run or both, and then stop typing.”

The most effective statements of work, Tollen writes, will focus on the outcome — on specifications for the technology to be built or run — and minimize restrictions on how.

Read the article.

The standards for determining when a party waives its right to arbitrate through participation in litigation have never been uniform among the circuits or easily applied writes John Lewis in BakerHostetler’s Employment Class Action Blog.

He discusses the recent Fifth Circuit opinion in Forby v. One Technologies, L.P., which illustrates the difficulty of applying the “prejudice” requirement in a consumer fraud and unjust enrichment class action.

In reversing a district court ruling, the appellate court highlighted some analytical problems that apply equally in the employment law context.

Read the article.

Like all contracts, operating agreements — which are celebrated for allowing business partners to freely define their relationship by contract — can be amended and modified, according to a post in The LLC Jungle.

Author Kevin Brodehl discusses a recent opinion from the Supreme Court of New York that illustrates how the process of amending an LLC’s operating agreement can sometimes be used to gain the upper hand in a dispute between members.

The case involves a majority of members amending the operating agreement to remove the manager and escalate capital calls.

Read the article.

In an ABA Journal column, Bryan Garner explores the curiosity of “busts”—the prevalence of contractual provisions, sometimes perpetuated in deal after deal, that make no literal sense at all.

“That they exist at all is something of a marvel. After all, you’d think that transactional lawyers would adopt a protocol of reading and rereading each contract that goes out the door,” he writes. “Given that critical thinking and close reading are prized habits for lawyers, contradictory or outright nonsensical provisions should be exceedingly rare. Alas, they’re not.”

Garner discusses the dangers of flawed forms and word swaps, such as mixing up “lessor” and “lessee.”

Read the article.

When contracting with outsourcing firms, there is often a lot of dissatisfaction with the outcomes, says Kate Vitasek, a consultant and University of Tennessee faculty member. And that is because companies don’t get the contracting part correct.

She is quoted in a report in the Supply Chain Digest.

“Vitasek says she and other researchers at the University of Tennessee have uncovered a better, more user-friendly way of getting to a sound sourcing agreement,” according to the report. “That insight came after studying some of the most successful outsourcing agreements from such companies as Procter & Gamble, Microsoft and McDonald’s, in research funded by the US Air Force that lasted almost a decade.”

The article lists five rules for successful outsourcing contracts.

Read the article.

Tesla announced on Friday that General Counsel Todd Maron is leaving the electric vehicle maker, the second high-ranking attorney to do so this quarter.

CNBC reports that the move comes a month after Phil Rothenberg left his post as Tesla’s vice president of legal to become general counsel at Sonder, a hospitality start-up.

CNBC’s Lora Kolodny reports:

“The electric car company said it plans to replace Maron with seasoned Beltway trial lawyer Dane Butswinkas, a chairman at Williams & Connolly, who was also a Co-Chair in the firm’s Commercial Litigation, Financial Services and Banking Groups.”

Read the CNBC article.

Image by Kārlis Dambrāns

A jury trial in Qualcomm’s wide-ranging legal war with Apple has been set to begin April 15 in San Diego federal court, with a settlement looking unlikely at this point, reports The San Diego Union-Tribune.

U.S. District Judge Gonzalo Curiel scheduled the trial at hearing Friday. Qualcomm had sought to begin the trial in February, but Curiel said the April date was needed to accommodate the court’s schedule.

Qualcomm Chief Executive Steve Mollenkopf had previously told CNBC’s Jim Cramer that the San Diego cellular technology firm was “on the doorstep of finding a resolution” to the dispute with Apple, according to Union-Tribune reporter Mike Freeman.

But Apple attorney William Isaacson told Curiel on Friday that a settlement wasn’t in the cards.

Read the San Diego Union-Tribune article.

Reuters is reporting that a U.S. judge in California has granted preliminary approval to a $48 million settlement for investors who said Volkswagen AG made false and misleading statements over its excess diesel emissions.

Reuters reporter explains:

Lawyers for the investors, who include police and other municipal pension funds, had estimated that the maximum they could have recovered was $147 million. But Judge Charles Breyer said the settlement agreed in August appeared “fair, adequate and reasonable.”

The German automaker admitted in September 2015 to secretly installing software in nearly 500,000 U.S. cars to cheat government exhaust emissions tests, writes Reuters reporter David Shepardson.

Read the Reuters article.

A discussion on the Troutman Sanders website addresses the current state of the law governing a key link to remote contracting — hyperlinks — with the goal of advising how to successfully incorporate by reference separate contract terms using hyperlinks for purposes of contract formation.

“In a series of recent decisions, courts are developing an increasingly consistent view of what is required to successfully incorporate contract terms by reference using hyperlinks,” write Alan Wingfield and Troy Jenkins. “This emerging consensus focuses on four elements: labeling of the hyperlink; the location and prominence of the hyperlink; the accessibility of the information hyperlinked; and the consumer’s assent.”

They discuss those four elements and offer a list of rules to do and another list of methods to avoid.

Read the article.

The first in a series of posts on royalty calculation and payment from Morgan, Lewis & Bockius focuses on issues related to defining the relevant scope of royalty calculations in an agreement.

“While the specific terms governing a royalty will vary based on numerous factors, including the nature of the products and the underlying licensed materials and the contemplated commercialization structure, many concepts are useful across the board.” according to the post’s authors, Mike Pierides and Eric J. Pennesi.

They discuss fixed amounts vs. percentage of revenue, gross vs. net revenue, revenue from initial sales and renewals and add-ons, specific revenue exclusions, and discounts.

Read the article.

General Data Protection Regulation requirements might look like a new bureaucratic threshold for doing business in the European Union. But sooner or later, a strict regulation in this area is likely to occur in every country, points out Vladislav Nekrutenko in an article for IoT Evolution.

The acceptance of the California Consumer Privacy Act 2018 and the Brazil Personal Data Protection Law are good examples in this regard, he explains.

His article details some steps that can help a company fulfill its obligations in contracts with third parties and mitigate risks regarding third parties’ data misuse.

Read the article.

Image by Nick Youngson

Lowndes, Drosdick, Doster, Kantor & Reed takes a look at commercial leases that provide a right of termination to only one of the parties to the lease. such agreements raise the question: “Is this really a contract if one party can walk away at any time?”

The author, James E. Walson, provides a short answer: Unilateral termination rights without any limitation or condition render a contract illusory and make that contract terminable by either party. If, however, the contract places minimal limitations on the unilateral termination, even if not rigorous or burdensome, the contract is not illusory and will be upheld.

“When drafting unilateral termination provisions that require minimal conditions to their being triggered, one should be cognizant that some condition or burden must be placed on the terminating party so as not to void the entire agreement,” Walson writes.

Read the article.

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Reuters is reporting that a federal judge on Thursday raised the prospect of not approving CVS Health Corp’s deal to buy insurer Aetna Inc, which closed earlier this week, during a routine portion of the legal process.

“I was reviewing your motion, which, of course is not opposed. And I kind of got this uneasy feeling that I was being kept in the dark, kind of like a mushroom,” Judge Richard Leon of the U.S. District Court for the District of Columbia told lawyers for the Justice Department and the two companies, noting that the American Medical Association, among others, had objected to the deal.

“I’m very concerned, very concerned that you all are proceeding on a rubber-stamp approach to this,” he told them, according to a transcript of the hearing.

Read the Reuters article.

There may be certain circumstances based upon specific policy wording in a commercial general liability insurance policy in which there is coverage for an insured-employer for its vicarious liability arising out of the intentional and excluded conduct of its employees, writes Jeff Collins in an article for Jones, Skelton & Hochuli.

He discusses a case in which the words “the,” “an” and “any” have been assigned significant importance in the case law, and are also at issue in cases examining other liability exclusions.

In the case, a  court held that the phrase “any insured” in an exclusionary clause means something more than the phrase “an insured.”

Read the article.

A long-term care facility can execute contracts with many different vendors including food product and service vendors, laundry and linen providers, IT companies, and others, points out a post from Poyner Spruill.

“Whether working for a single-site operator or a multi-facility system, a thorough review of all contracts and a careful consideration of the ‘what-ifs’ are crucial steps,” write the article’s authors, Christopher S. Dwight and Iain M. Stauffer.

They discuss eight key tips to help with the process, including defining the contract, contract intake, the review process, determining who has authority to sign the contract, the length of the term, termination provisions, dispute resolution and venue, and maintaining the executed copy of the agreement.

Read the article.