An article in the Government Contracts Insights blog on the website of Morrison Foerster discusses stays of award and performance during the pendency of a bid protest.
Partner Daniel Chudd and associate James Tucker cover stay of contract awards, stay of contract performance, Court of Federal Claims protests, and stay overrides.
In a later post, they will cover the substantive grounds of protest.
Kilpatrick Townsend recently published some notes on a presentation made by Silicon Valley-based Kilpatrick Townsend Counsel Alan Dow on issues in the intellectual property arena concerning consulting agreements.
In the article, Dow discusses four key takeaways: Consulting agreements make it possible for companies to own IP produced by consultants, work-for-hire clauses, conflicting obligations, and failure to protect trade secrets.
Most arbitrations, and all commercial arbitrations, are creations of contract, and courts are generally required to enforce an arbitration agreement as they would any other contract, points out Samuel M. Tony Starr on Mintz Levin’s ADR: Advice From the Trenches blog.
Because the arbitration clause in a commercial contract is so critical, careful review of that clause surely must be a component of an enterprise’s risk analysis.
He offers 10 basic considerations that will help to guide that review.
The iconic jewelry store Tiffany & Co. is a model for trademark enforcement, aggressively and successfully policing its brand in the courts. Last year, Tiffany filed a lawsuit against Costco Wholesale Corp., claiming that the warehouse giant sold more than $6 million of ersatz Tiffany engagement rings and improperly used the jeweler’s name on at least 200,000 in-store signs. This week Tiffany prevailed by winning a $19.4 million judgment in federal court.
Dallas lawyer Chris Schwegmann, a partner at Lynn Pinker Cox & Hurst who tries intellectual property cases, has been following the Tiffany v. Costco dispute.
“This type of litigation not only discourages counterfeiters, but also ensures that Tiffany’s luxury brand doesn’t get diluted over time. I find it interesting that Costco argued that ‘Tiffany’ represents a generic term used to describe a ring setting, and not just a brand name. That’s a tough case to make against a company that aggressively defends its brand.
“Based on the sizable judgment, it is unlikely that other companies in the industry will try to make the same arguments against Tiffany & Co. That’s the benefit of aggressive trademark enforcement.”
In a legal battle that’s been underway since 2013, a federal judge ruled this week that Costco owes Tiffany & Co. a settlement of $19.4 million for selling diamond rings confusingly labeled as “Tiffany” in its stores, Forbes reports.
Forbes contributor Rachelle Bergstein explains that, while a jury found in Tiffany & Co’s favor in September of 2015, Costco continued to argue that its use of the name “Tiffany” referred to a generic style of ring, and not to the storied luxury house itself.
She writes that, while the suit sounds like a case of an elite, heritage brand pummeling a mass-market retailer for using its name to sell merchandise, it’s also a noteworthy example of how selling specialized products without a deep understanding of them can be disastrous (and potentially quite expensive) for the retailer.
General Motors Co. accused the trust set up to handle its bankruptcy claims of secretly plotting with plaintiffs’ attorneys to make it pay $1 billion in stock as part of a $15 million class-action settlement. Bloomberg Law is reporting.
As Bloomberg’s Erik Larson explains, the accord will pit GM against the “Old GM” General Unsecured Creditors Trust for the first time since the 2009 bankruptcy sale created the split to save the company.
Larson writes that attorney Steve Berman said that the settlement “between the plaintiffs and the trust for old GM will resolve hundreds of personal-injury cases stemming from GM’s faulty ignition switches, as well as a class-action suit over millions of vehicles that allegedly lost value due to a series of recalls in 2014.”
Cloud Service Providers (CSPs) are evolving their customer agreements, points out Kemp IT Law.
Richard Kemp discusses how CSPs are addressing the growing risks to service availability from patent claims and in particular how Amazon Web Services (AWS) had included in their Customer Agreement an unusual IP non-assert term.
“From the way the AWS terms work, it’s also at best an open question whether they protect the customer from the risk that open source software used in providing the service infringes third party patent or other rights,” he writes. “Open source is a critical component of the cloud and customers need to understand and review this aspect when selecting their CSP.”
As a result of a rule imposed by the Consumer Financial Protection Bureau, consumer contracts entered into after March 19, 2018, with a wide range of consumer financial services companies will need to be revised in regard to their agreements’ arbitration clauses.
Pillsbury Global Sourcing explains on its website that those companies “will need to: (a) remove language in pre-dispute arbitration provisions that bars consumers from participating in class actions; and (b) add language informing consumers of their rights to participate in class actions. The Rule will also require such companies to provide information on individual arbitration awards to the CFPB for publication in a public database (redacting consumers’ private financial information).”
Alston & Bird asks and answers the question: In an international arbitration, when an arbitration provision is ambiguous about the seat of the arbitration, who resolves the question?
Authors Andy Tuck and Lee Deneen discuss Bamberger Rosenheim Ltd. v. OA Development Inc., in which the Eleventh Circuit held that interpretation of a venue provision is the arbitrator’s prerogative.
They write:
The federal circuits are split on whether the FAA serves as a proper basis for vacatur of an international arbitration award. In this case, the panel saw “no reason to analyze [Bamberger’s] arguments under the New York Convention or [the FAA] separately,” since Bamberger’s argument was the same for both bases for vacatur. The court stated in a footnote that it “assume[d], without deciding, that [the FAA] applies to the award in the present case.”
Plantronics faces a big hurdle in its upcoming trial on a competitor’s accusations that it used “monopolistic” power to control the market for telephone headsets: how to explain to a jury that its employees deleted potentially crucial emails, reports Bloomberg Law.
A federal judge concluded last July that Plantronics had engaged in bad faith discovery spoliation, and demonstrates the far reaching consequences of discovery. The presiding judge said at the time he would instruct the jury that “it may — not that it must” presume that the deleted emails — some of which were never recovered — were unfavorable to Plantronics, writes reporter Gabe Friedman.
The trial is scheduled for October.
Aliya Ramji, director of legal and business strategy for Figure 1 Inc., responds to a question from a corporate lawyer who asks about the most important parts of a non-disclosure agreements.
Writing in the ACC Docket, she explains that she uses two strategies to keep up with the volume of NDAs.
The first is to draft a template NDA for the business unit. Then, in order to better facilitate the review process, she develops negotiation parameters for the business units.
In the article, she discusses some key elements to include, including identification of the parties, defining the confidential information, the purpose of the disclosure, what is excluded, and the term.
Do words matter? A Dallas County jury recently ruled — to the tune of $1 million — that they do, according to a post by Androvett Legal Media & Marketing.
In March 2015, Dallas wedding photographer Andrea Polito filed a defamation lawsuit against former clients Neely and Andrew Moldovan.
Polito, who photographed the couple’s wedding in 2014, alleged they launched a large-scale social media campaign against her over what they claimed were unreasonable fees associated with the delivery of their wedding photos.
In a TV interview, the couple charged that Polito was “holding their pictures hostage.”
According to the suit, the newlyweds posted to social media and blogs that Polito “cheated” and “scammed” people, and that they were “pretty sure [Polito’s] business was done.”
As their online onslaught went viral, Polito said the allegations ruined the business she spent 13 years building.
“People knew me and my reputation,” she told the Dallas Morning News. “All the name-calling, all the bullying … I was humiliated.”
In court, Polito’s attorney, Dave Wishnew of Gruber Elrod Johansen Hail Shank LLP, argued the Moldovans should be held liable for defamation, disparagement and civil conspiracy.
The jury agreed, awarding Polito $1.08 million in actual and punitive damages.
“We hope that this sends a message that freedom of speech does not mean freedom from consequences,” Wishnew said. “The right to air legitimate grievances and opinions doesn’t extend to a concerted campaign designed to defame and destroy someone’s hard-earned business.”
Image by Mike Mozart
Documents released Tuesday in a lawsuit against Monsanto raised new questions about the company’s efforts to influence the news media and scientific research and revealed internal debate over the safety of its highest-profile product, the weed killer Roundup, reports The New York Times.
Monsanto said it was outraged by the documents’ release by Baum, Hedlund, Aristei & Goldman, writes Danny Hakim.
“There is a standing confidentiality order that they violated,” said Scott Partridge, vice president of global strategy for Monsanto. He said that while “you can’t unring a bell,” Monsanto would seek penalties on the firm.
A partner in the firm said Monsanto had failed to file a motion seeking continued protection of the documents, but the company said no such filing was necessary.
Jared Butcher, writing in the Steptoe Blockchain Blog, suggest three tools to address smart contract risks: (1) cybersecurity insurance policies, (2) indemnification agreements with outside vendors, and (3) “make whole” agreements among the smart contract parties themselves.
He writes that insurers, vendors, and other contract parties can provide the best source of indemnification, assuming that the proper contractual arrangements are put in place.
Under the heading of cybersecurity insurance policies, he writes:
“One issue worthy of particular attention is the employee exclusion. These exclusions in the policy language should be scrutinized to determine the level of coverage for losses caused by employee errors, which are likely to be a significant source of risk in a smart contract system.”
By Stephen F. Pinson
Scott & Scott
More and more businesses are considering accessing hosted software rather than purchasing on-premise software. They are also placing data in third-party public or private clouds instead of selecting on-premise software. This article will explain the key considerations and contractual provisions when deciding to utilize a hosted software cloud solution versus On-premise software solutions.
KEY CONSIDERATIONS
1. Strategic Considerations
Using hosted software in the cloud allows for greater flexibility such as: allowing a business to access its information from any location, and not having the initial outlay of capital to purchase servers and other infrastructure when implementing the software’s use. This is a significant departure from on-premise software, which often requires substantial infrastructure investment, and can only be accessed from the device the software installed.
2. Financial Considerations
Cost Savings
Most businesses switch to the cloud because of the belief in inherent cost savings. However, in the long run, switching to the cloud will not always result in savings. Cloud infrastructure costs money, and the business will be the one that bears the costs, usually in a monthly subscription, instead of a yearly license fee.
Return on Investment – Moving from CapEx to OpEx
On-premise software products and hardware infrastructure are generally considered capital expenditures, while subscriptions to cloud software are typically classified as operating expenses. It is important to consult with tax professionals to ensure there are no unintended consequences from making the switch from on-premise to hosed software products.
Infrastructure investments / upgrades
Generally, on-premise software requires purchase of hardware or use of infrastructure that is already in place. On the other hand, moving to the cloud may require an investment in upgraded devices or equipment to maximize the value of the hosted solutions.
Cost to implement or migrate. When moving from on-premise to the cloud, there can be significant implementation or migration costs. Companies may not adequately consider the costs related to migrating data to the hosting or storage providers. The number of man hours required to successfully migrate can be significant and costly. Accordingly, the scope and complexity of the migration is an important consideration when negotiating a contract.
3. Operational Considerations
Outsourcing activities
Using the cloud can pave the way to outsourcing non-core operations. On the other hand, on-premise software may require more sophisticated security credentials currently in place, whereas the cloud application may reduce that need.
Support
On-premise software generally requires maintenance and support along with support levels and support times. These generally are limited to business hours, and come with increased costs for after-hours support. When using the cloud, maintenance and support are included as part of the package, and are generally included as a 24/7/365 service.
4. Technical Considerations
Infrastructure
To use on-premise software, companies must procure appropriate hardware. For cloud solutions, the cloud vendor provides the hardware, infrastructure and applications for the software to work, but that does not mean that there is no investment by the end user to the software. The end users may need to upgrade devices and security plug-ins. They also may need to expand firewalls to cope with the additional internet traffic. Internet providers may need to provide more bandwidth.
Location and Ownership of the data
There is little question as to where data will be stored and who will own the data when using on-premise software – the customer owns the data. However, when using cloud solutions, the location and ownership of the data may become unclear. A business wants to own its data and not let it be used for research or statistical purposes, particularly by its competitors. Additionally, many businesses want or need the data to be stored in the nation where they are located or where they are doing business, and not some remote or foreign locations.
5. Security, Backup, & Privacy Considerations
Security
When using cloud or on-premise software security is important. On-premise software provides a level of security that is implemented through patches and updates to the software. Cloud providers can hand off their hosting and security to a third party provider, which can compound security risks. It is critical to understand and document who bears the risks of a security incident in the event of a security incident.
Backup
For on-premise software, the backup is left to the business user. For cloud, the cloud provider generally provides the backup for certain intervals of time, which is generally contracted for by agreement. It’s important to have a backup schedule with redundant backups when contracting with a cloud provider, as well as a general understanding of what information is purged from the system.
Privacy
For on-premise software, privacy is generally not a concern, because the software is part of the business infrastructure. However, in a cloud implementation, privacy issues become a major concern because business information is sent over the internet which can be intercepted by hackers. Understanding how the cloud provider protects your privacy is always important.Accordingly, below is a list of key contractual provisions that are critical when deciding to utilize hosted software in the cloud vs. on-premise software.
KEY CONTRACTUAL PROVISIONS
1. Strategic Considerations
It is critical to clearly identify the requirements for companies that will host software applications or store the business’ data. For flexibility, it is also important to evaluate whether traditional on-premise license metrics will be appropriate for any hosted software solutions. Generally, it is its best practice to negotiate the number of users rather than the number of devices when negotiating a cloud deal for maximum use. A user can use several devices at once, and being charged for each device would be costly to the business.
2. Financial Considerations
To be sure fees are controlled when deciding on utilizing an on-premise solution versus a hosted software solution, the business should calculate the cost of both on-premise licenses along with maintenance and support and compare the costs to the total amount required to subscribe to the hosted version of the software solution. If the costs are relatively the same, then capping the monthly cloud subscription every year would be wise to keep costs in line. Additionally, it’s important to negotiate infrastructure upgrades and implementation and migration costs to the cloud or to any subsequent provider.
3. Operational Considerations
It is important to negotiate who will have access to the cloud and what administrative rights will be assessed to each user. Additionally, its best practice to negotiate the support levels when using cloud, and any service credits for failure to implement the service.
4. Technical Considerations
When negotiating a cloud deal, companies should understand and document ownership of the data, allowable uses of the data (even in aggregated form) by the cloud provider, and locations where the data may be stored.
5. Security, Backup, & Privacy Considerations
For security, it is a best practice to include security protocols in the contract and to successfully negotiate a reasonable limitation of liability for security incidents, back-up failures, or privacy incidents. In these scenarios, the limitation of liability may include a carve-out, or a super-cap to handle the increased risks involved. For backups, it is always important to contract with the cloud provider the specific backup procedures, protocols, and backup intervals required by the business. Additionally, it is important to include in the contract security reports or audits for the business to ensure that the cloud provider is following those contractual obligations. Lastly, for privacy, it is always important for the business to include privacy language and protocols for incident response. Specifically, when an incident occurs, the business should require the vendor to notify the business immediately of any privacy or security incidents. Lastly, it’s always best to negotiate the appropriate levels of insurance for provisions dealing with these topics.
When switching from on-premise software to a hosted software cloud solution, there are numerous business issues to consider. Having a plan when switching to a hosted software cloud provider is crucial to a business’ success. Given the risks, it is increasingly important to seek advice from experienced counsel when negotiating contracts like these to make sure the risks are adequately assessed and each party’s interests are protected.
Glenn West, writing in Weil, Gotshal & Manges LLP’s Global Private Equity Watch, says that agreed damages provisions are a staple of many commercial contracts.
But their enforceability is frequently questioned because of the common law’s requirement that the damages payable for breach of contract not exceed the amount required to compensate the non-breaching party for the foreseeable losses it actually sustained by virtue of the breach.
West discusses a case that he says presents an important practical reminder: practitioners seeking to ensure that agreed damages provisions are enforceable should avoid limiting the items of loss for which the agreed damages are providing compensation and constitute a legitimate pre-estimation.
In most cloud engagements these days, it is not only the customer’s data that is in the cloud, but also many key parts of the vendor contract as well, explains Mike Overly of Foley & Lardner.
“That is, the average cloud vendor today generally places several key areas of the contract in the cloud (e.g., service level standards, security measures, support obligations, service descriptions, etc.). In some instances, the entire contract is in the cloud. What this means is that these key contract provisions or the entire contract ‘floats’ in the cloud and can be changed at any time by the vendor, frequently without notice to the customer. Even if the customer is given notice, in many cases, the customer has no right to object to the changes,” Overly writes.
There are specific actions an organization can take to ensure it has the leadership it needs in case of a crisis, as well as for their future sustainability, according to TrainHR.
The company will present a webinar on the topic on Thursday, Sept. 7, 2017, at 1 p.m. EDT.
“Best-practice organizations use succession planning to not only prepare for potential leadership challenges but they also rely on such plans to develop and maintain the strong leadership that’s required to grow and keep pace with changes in their business, industry, and overall marketplace,” TrainHR says on its website.
The Philadelphia Business Journal is reporting that the former general counsel of an New Jersey timeshare consulting service was sentenced to a year in prison for conspiring to obstruct justice in a federal criminal case tried in 2013, federal prosecutors in New Jersey said.
Joshua L. Gayl, 37, was GC of the Vacation Financial, which offered phony consulting services to owners of timeshares, reports Jeff Blumenthal.
Gayl pleaded guilty in March 2016 to a criminal information charging him with one count of conspiracy to obstruct justice.
“Gayl admitted that he misled a witness after learning that the witness told the FBI about being defrauded by VO. Prosecutors said he contacted the witness, hoping to obtain statements favoring the defense at trial. He offered the witness assistance in exchange for the information given to authorities” writes Blumenthal.
Read the Business Journal article.
Marc Perrone, president of the United Food and Commercial Workers International Union, sees Amazon the way some Rust Belt workers see global trade — as a threat to American jobs, reports The Washington Post.
Perrone was planning to file a complaint to the Federal Trade Commission, arguing that letting Amazon buy Whole Foods would trigger a wave of store closures and eventually quash customer choice, writes the Post‘s Danielle Paquette.
“The United Food and Commercial Workers International Union has roughly 1.3 million members across North America, working for retailers at a typical wage of about $18 an hour, including benefits,” according to Paquette. “Members are employed at stores such as Kroger, Safeway and Albertsons. Whole Foods, for contrast, isn’t unionized.”