eSignLive by Vasco has made available for downloading a new white paper that discusses the best security practices for implementing e-signatures and evaluating vendors. (See the download form below.)

“It is important to make sure your electronic signature provider meets the highest security standards. Security is at the core of a trusted digital experience between you, your employees and customers,” the company says on its website.

That means more than simply passing an audit. eSignLive recommends taking a broader view of e-signature security that also addresses:

• Choosing the appropriate level of authentication
• Protecting signatures and documents from tampering
• Making it easy to verify e-signed records
• Ensuring vendor-independent records
• Verifying the vendor has a consistent track record of protecting customer data
• Creating end-to-end trust through white-labeling and integration with your existing IAM framework

The white paper includes a best practices checklist.

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By Keli Johnson Swan
Scott & Scott LLP

In a civil copyright infringement claim, many users of copyrighted material are surprised to learn that once the copyright owner has demonstrated that it owns a copyright in the work, the burden shifts to the copyright user to demonstrate that it had the right to use the work in the way it was using it. For copyrighted software use, this means that not only must the user have a valid license, the use case must fall within the scope of the license terms. Software publishers actively protect their copyrighted material by pursuing audits of its consumers either directly or through entities such as BSA|The Software Alliance, or the Software & Information Industry Association (“SIIA”).

There are two vital steps to proving a consumer is innocent of copyright infringement.

1. Providing proof of purchase documentation for the license.

The license agreement itself often provides the authority for the publishers to audit any consumer of its product, but there are usually little or no guidance in the license agreement for what proof will be acceptable in a license review. This is further complicated by the fact that the BSA and SIIA issue their own set of audit standards when investigating potential compliance gaps.

In order to demonstrate a license to use software that is acceptable to the BSA and SIIA in an audit, the consumer must provide a copy of an entitlement that shows the date purchased, price paid, software version and title, quantity, and the company name. Many consumers do not keep accurate records of software purchases, particularly for products that are very old. The auditing entity will presume there is no license unless the user can provide documentation of its license, regardless of the age of the software installed.

However, there are different types of documentation that may be used to prove ownership of a license, including, but not limited to:

a. Customer purchase history reports from vendors such as CDW and Dell;
b. Dell Service Tag Reports;
c. E-mail confirmations for software purchases;
d. Microsoft Licensing Statement;
e. Adobe Licensing Statement;
f. Autodesk Licensing Statement;
g. Software publisher agreements (ex. Microsoft EA);
h. Autodesk serial numbers (if registered correctly);
i. Hardware purchases with OEM operating systems or Microsoft Office software; or
j. Software registration confirmations.
It is always helpful to acquire a report from a vendor if possible to acquire a purchase history, or alternatively, a licensing statement from the publisher itself.

2. Demonstrating compliance with license terms.

In addition to providing evidence its licenses, a consumer often must demonstrate that it has complied with the terms of the license agreement for the software installed. For example, some Home or Student versions software specifically restricts commercial use, so if a business has these versions installed and is using it to generate revenue, the license is invalid because the use case is outside the scope of the license grant.

There are more complicated use cases that also violate the terms of license agreements, ranging from geographic restrictions, installing software on affiliate or related entities’ machines without approval, installing software on servers, or installing software on hosted servers without the appropriate licenses.

In order to avoid potential copyright infringement claims and monetary penalties, it is prudent for consumers to conduct regular internal audits, consistently retain all software purchase records, and closely evaluate the use cases to ensure compliance with the relevant license agreements.

LawGeex has published a case study showing how social media company Brandwatch uses artificial intelligence to reduce costs and speed up the contract review process.

The case study focuses on Dylan Marvin, Brandwatch’s general counsel. His company employs more than 350 people.

He worked closely with LawGeex to build his own customized solution, resulting in:

• 80% reduction in time spent reviewing routine contracts
• 90% cost saving compared to using outside counsel or hiring new staff
• Legal department no longer a bottleneck
• 3 times faster deal closing

Download the case study.

 

 

The Securities and Exchange Commission has filed civil fraud charges against the general counsel of Ohio-based chemical company RPM for allegedly mishandling the response to a U.S. Department of Justice investigation, Bloomberg Law reports.

Edward W. Moore, RPM general counsel and chief compliance officer oversaw the company’s response in 2011 when the DOJ started investigating whether its subsidiary, roofing materials company Tremco, had overcharged the government by millions of dollars on certain contracts,according to the SEC complaint.

The SEC accuses Moore of failing to disclose the investigation to RPM’s shareholders, along with his CEO, CFO and internal audit committee and auditors, in a timely manner, writes Gabe Friedman.

Read the article.

 

 

By Stephen F. Pinson
Scott & Scott, LLP

In a previous blog, I spoke about what an indemnification provision is and how it operates. In this blog, I will discuss questions that licensors and licensees should ask when negotiating an indemnification provision within a software contract: (1) what are the licensor’s objectives in the indemnification section, (2) what are licensee’s objectives in the indemnification section, (3) what is a checklist of elements and questions that should be negotiated in a indemnification section, and (4) what is a general checklist of provisions that should be included in a indemnification section.

(1) Licensor’s objectives in an indemnification section

The licensor’s (software vendor) objective is to protect itself from any claims resulting from the licensee (business) from breaching the license grant. For example, if the licensee modifies the software contrary to the license grant, then the software vendor may be exposed to third-party claims. The licensor often will seek indemnification from those types of claims through the indemnity clause called “IP Indemnity.”

On the other hand, another objective of the licensor is to indemnify the least amount of loss or liability possible. For some contracts, and indemnification section will not exist for a licensor to indemnify, and for others it will be detailed and extensively negotiated. Usually, a licensor at the very minimum will indemnify for intellectual property infringement for its own liability.

(2) Licensee’s objectives in an indemnification section

Alternatively, the licensee is looking to be protected from third-party lawsuits for intellectual property infringement resulting from a situation where the licensor has intellectual property (typically software code) that infringes on the property of someone else (third-party claimant). In this scenario, the licensee is also infringing on the rights of the third party and can be sued for infringement. For this reason, the licensee would want to seek protections in the indemnification provision.

(3) Checklist of questions that should be asked when negotiating a warranty section on performance warranties:</bold

Consider the following negotiation elements when drafting, negotiating or entering into a contract with an indemnity provision:
1. Applicability – Who is indemnifying whom? Is the indemnification mutual or unilateral?
2. Scope of Indemnity – What is the scope of the indemnification? Will the Indemnitor indemnify/reimburse for losses, defend (a duty to provide a defense), or hold harmless (bar claims against the Indemnitee)?
3.Nature of covered claims – What risks of doing business under the contract are being indemnified, i.e., inter-party claims based on breach of representation, warranty, or other contractual obligation, third party claims based on product liability, infringement, fraud, or negligence, governmental claims based on regulatory matters, or other specified claims such as: personal injury, property damage, economic loss, and attorneys’ fees and costs of defense?
4. Exceptions – Are there any exceptions to indemnification such as taking control of the claim? Or not causing the indemnifying circumstances such as not modifying code?
5. Limitations – Should there be a monetary limit on the extent of the indemnity? If so, the limitation should bear a reasonable commercial relationship to the contract. Is there a limitation as to the time a party can bring an indemnification claims (i.e., within a 6 months, 1 year, etc.)? Is there a limitation on the amount that can be recovered for an indemnified claim in the Limitation of Liability (i.e., preferably a licensee will want an exclusion where the limitation of liability does not apply and damages are uncapped)? Or, does the contract include a provision requiring coverage of certain risks by insurance such that the indemnity is limited to the amount of the insurance coverage (i.e. contractual liability insurance)?
6. Procedure – Does the indemnity provision specific procedural requirements for recovery, like submitting a claim within a certain time period, of follow certain procedures to submit a claim for Indemnitee? Is there a duty to mitigate any portion of the claim before submitting it to the Indemnitor?
7. Exclusivity of remedies – Do the terms of the contract determine whether the Indemnitor is obligated to reimburse the Indemnitee for a particular claim, and if so, when? Does the contract clearly express an intent to indemnify a party against its own negligence, and if so does it make sense under the circumstances?
8. Review other corresponding provisions in the contract – Does the indemnification provision harmonize with the warranty and limitation of liability section in the contract? Does the insurance section of the contract harmonize with the indemnity section? Are there enough insurance limits for this type of claim scenario for the licensor? Is the limitation of liability uncapped for intellectual property claims for the licensee?

(4) Provisions that should be included in a typical Indemnification section:
Licensor Provisions:
Licensor will defend, indemnify and hold harmless licensee for third party intellectual property infringement.
Licensor will pay all costs and damages awarded.
Conditions – Licensor’s obligations for indemnification are conditioned on the following:
(a) Licensee notifying Licensor promptly in writing of such action.
(b) Licensee giving Licensor sole control of the defense or settlement thereof.
(c) Licensee cooperating with Licensor in such defense.
Exclusions – Licensor will have no liability if the following occurs:
(a) any use of the Software not in accordance with the Agreement
(b) any modification of the Software made by any person other than Licensor.
Entire Liability – This is the entire liability of licensor and exclusive remedy.

Licensee Provisions:

Licensor will defend, indemnify and hold harmless licensee for third party intellectual property infringement.
If Licensee’s continued use of the Software is restricted or prohibited as a result of any such infringement, Licensor shall, at Licensee’s option and at no charge to Licensee:
(a) secure for Licensee the right to continue using the Software
(b) modify or replace the infringing components of the Software so that they are non-infringing
(c) refund to Licensee all amounts paid by Licensee for the Software.
Exclusions – Licensor will not be obligated to indemnify Licensee to the extent of the infringement claim based upon:
(a) use of the Software in breach of this Agreement
(b) any modification of the Software made by Licensee (other than at Licensor’s direction)
Defense of Third-Party Suits – Licensee will notify Licensor of third party suits promptly. If licensee tenders claim to Licensor, Licensor will have right and obligation to defend such claim. Once Licensor assumes defense of a Claim, it will be conclusively presumed that Licensor is obligated to indemnify Licensee. No settlement of a Claim will be binding on Licensee without Licensee’s prior written consent

*This is not an exhaustive list of provisions

Remember, an indemnification section is a specialized risk transfer section within a software contract. It is crucial to understand it and to successfully negotiate it to prevent unwanted risk. It is always important to seek advice from experienced legal counsel in order to understand all the risks involved when negotiating these types of provisions in a software contract.

LawGeex has launched new A.I. Contract Review technology designed to help in-house counsel read, review and understand contracts.

The company says the technology features artificial intelligence that reviews contracts and highlights any issues, reviews contracts based on the user’s own legal checklist, reviews other people’s changes to standard contracts, can review any contract custom built for any industry,  and automatically manages contract approvals and escalations.

The streamlined workflows between sales, operations and legal can save users 80 percent of the time and 90 percent of the costs while cutting the time to close deals by two-thirds, the company reports.

The artificial intelligence program can recognize when any clauses are rare, missing, or potentially problematic, and provide a plain English report.

• Interactive contract reports with recommended fixes
• Lightning fast turnaround – 80% time saved reviewing and approving contracts
• Legal speak translated into simple English
• Checked by real life lawyers for quality and accuracy

Learn more.

 

 

Wednesday, Sept. 21
2-3 p.m. EDT

eSignLive by Vasco is sponsoring an online presentation providing an overview of the basic terminology, concepts, and laws related to electronic signatures and answer the most frequently asked questions on the topic.

The free webinar will be Wednesday, Sept. 21, beginning at 2 p.m. EDT.

The speaker will be Richard Medina, co-founder and principal consultant of Doculabs.

Topics will include:

• What is the difference between an electronic signature and a digital signature?
• How can you prove who e-signed?
• What legal and compliance requirements do we need to consider?
• What ROI metrics have others reported?
• What do signers need in order to e-sign?
• How do we get started? What’s the cost? What’s the effort?

Register for the webinar.

 

 

The Treasury Department has released proposed regulations that seek to eliminate valuation discounts for interests in family-controlled entities, according to an Arnold & Porter article.

Authors Laura A. Jeltema, Thomas W. Richardson and Cara M. Koss write that the impact of these new rules is significant and far reaching, and if adopted in their current form, will drastically alter the landscape of wealth transfer planning for family business owners.

In the existing code, Internal Revenue Code Section 2704 was created to prevent families from using valuation discounts to artificially reduce the value of interests in family-controlled entities.

The IRS and Treasury now believe that Section 2704 “has been rendered ‘substantially ineffective’ by the recent trend of states providing restrictive default liquidation provisions. In response, one of the many changes contained in the Proposed Regulations narrows the exception to only those restrictions that are required to be imposed by federal or state law, and not merely those allowable as default provisions,” according to the article.

Read the article.

 

 

A common result of mergers in the business world is the layoffs of employees whose jobs have become redundant after two units are combined.

“What some people may not know is that the same thing applies to in-house legal departments following corporate mergers and acquisitions,” writes Staci Zaretsky for Above the Law. This time around, in-house counsel at beverage giant SABMiller will need to grab a drink after the company’s merger with Anheuser-Busch InBev closes next month.”

And The Global Legal Post reports:

The redundancies form part of a company-wide structural overhaul that will also see SABMiller general counsel John Davidson stand down next year once the merger is complete. Senior lawyers have already been notified of the lay-offs by Mr Davidson himself, though consultations are still ongoing and staff won’t be formally notified of the management’s decision until the middle of next month. SABMiller company secretary and deputy general counsel Stephen Shapiro has already been confirmed as one of those affected by the lay-offs, as well as deputy GC for M&A Stephen Jones and deputy GC for regulatory and industry affairs John Fraser. The company has indicated that up to 35 in-house staff will be likely be affected by the cuts.

Read Above the Law and Global Legal Post.

 

 

CNN Money poses a question that may be on the minds of people in the executive offices of Wells Fargo after more than 5,000 employees have been fired as a result of a scandal involving phony bank accounts: Do the CEO or other senior executives need to be fired, too?

The Los Angeles City Attorney and Consumer Financial Protection Bureau found that Wells Fargo employees had secretly set up new fake bank and credit card accounts in order to meet sales targets. That practice led to a fine of $185 million.

“CEO John Stumpf made $19.3 million in compensation in 2015,” reports Paul R. La Monica. “That makes him one of the top-paid bankers in the United States as he has been for years, along with these others: JPMorgan Chase’s Jamie Dimon, Bank of America’s Brian Moynihan and Lloyd Blankfein of Goldman Sachs. Stumpf, and his predecessor Dick Kovacevich, are well-known in banking circles for leading the bank’s efforts to cross-sell, or get customers to sign up for more and more accounts, with Wells Fargo.”

Read the article.

 

 

The producers of motion picture “Middle Men,” a drama about the birth of the business of internet pornography, filed a breach of contract lawsuit against Paramount Pictures claiming the movie studio failed to properly promote, distribute, and pay royalties on the film, according to an article published by Androvett Legal Media & Marketing.

The article says the movie was set up for success with director George Gallo and well-known actors Luke Wilson, Giovanni Ribisi, and James Cann. Despite buzz around the film at Cannes, the lawsuit explains that Paramount purposely depressed the film’s box office performance by withholding marketing and only releasing the movie in limited cities – showing only one screening of the movie in New York City on a Sunday afternoon for opening weekend.

The article continues:

In addition to failing to fully uphold a $7 million marketing agreement, Paramount sold the movie to the premium cable channel EPIX for streaming to services such as Amazon Prime and Netflix. Paramount holds a 43-percent stake in EPIX. The lawsuit says that Middle Pictures Inc., the film’s producers, have not received their fair share of the profits from streaming “Middle Men.”

“We plan to prove that when Paramount agreed to distribute ‘Middle Men’, it only saw the film as an opportunity for their own financial gain at the expense of the independent film company,” says Jeffrey Simon of Dallas-based Simon Greenstone Panatier Bartlett, PC, which represents Middle Pictures Inc. “Evidence shows us that the studio simply bundled the critically-acclaimed film with other Paramount products.”

Simon says the movie studio giant either can’t or won’t show auditors in full detail  if, or how, the $6.8 million that Middle Pictures provided for marketing was spent.

Managing third-party vendor relationships has recently become a hot topic for state and federal financial bank regulators, writes Jerry Blanchard of  Bryan Cave LLP.

Some examinations have resulted in regulators imposing settlements and impose civil money penalties on vendors, he reports.

He explains that, “The OCC guidance is generally looked at as the ‘gold standard’ for evaluating issues that need to be addressed in a vendor agreement. That does not mean that every contract a bank signs needs to have every one of those issues addressed or that each one needs to be resolved in favor of the bank. Vendor contracts come in many different shapes and sizes and may affect everything from back office processing, internet delivery systems, use of the ‘cloud’ to the people watering the plants at the branch. vendors will vary from small local operations to multi-national companies.”

Read the article.

 

 

In reviewing the scope of an arbitration agreement that was part of a supply agreement, the U.S. Court of Appeals for the Federal Circuit affirmed the district court’s decision, determining that the defendant’s breach of contract counterclaims were related to the plaintiff’s patent infringement claims and thus were exempt from compulsory arbitration under the supply agreement, reports Andrea Coronado for McDermott Will & Emery.

She discussed Verinata Health, Inc., v. Ariosa Diagnostics, Inc., Case No. 15-1970 (Fed. Cir., July 26, 2016) in an article published by The National Law Review.

“The Court reasoned that the national policy favoring arbitration when parties contract for that mode of dispute resolution under the Federal Arbitration Act applies only in circumstances where the scope of the agreement is ambiguous as to the dispute at hand, and only where the presumption in favor of arbitration cannot be rebutted,” Coronado wrote.

Read the article.

 

 

Exterro is offering its new “2016 Law Firm Benchmarking Report – Staying Competitive in Today’s Crowded Legal Market” for free downloading.

This benchmarking report discusses why changing legal business circumstances will force firms to find ways to increase productivity or risk revenue loss.

The download includes:

• 24-page comprehensive report, which surveyed 112 law firm professionals
• Key topics include how law firms are billing their clients, approaches used for managing legal operations and more…
• Example of one interesting stat: 79% of law firm respondents stated that client expectations have elevated (i.e. clients expect more for less)

Download the report.

The bi-annual European Corporate Counsel Summit will take place November 21-22, 2016 at the Parco Dei Principe Grand Hotel & Spa in Rome, Italy.

The Marcus Evans event aims to help business people invigorate their operations, grow sales faster through a time-efficient format, and target qualified buyers through one-on-one meetings, the company says on its website.

Register for the event.

 

 

 

Kentucky lawyer Alex R. White has filed a class action complaint in U.S. District Court for the Southern District of New York against Lawyer.com LLC and World Media Group LLC, alleging violation of New York and other state consumer protection statutes, reports Legal NewsLine.

Reporter Jenie Mallari-Torres writes that the complaint claims White and his class suffered damages to the reputations of their business and professional careers when users posted unflattering reviews on the defendants’ website. Some the lawyers and judges had grades of “D” or “F”.

“White alleges the defendants enriched themselves at the expense of lawyers who have not authorized the disclosure of their personal and professional information, bombarded attorneys with unsolicited emails from ‘potential clients. as part of its efforts to sell premium memberships on its website which cost hundreds of dollars a month and promoted attorneys and law firms based solely on how much money was paid,” according to the report.

Read the article.

 

 

With all the pressure on companies to build a robust cybersecurity defense within their own four walls, one area of risk might be getting overlooked, writes Shawn Shinneman of the Dallas Business Journal.

He talked to Sara Romine, an attorney at Carrington Coleman in Dallas, to find out how to deal with an attack that comes in through a third-party vendor.

Companies can be at risk and liable when dealing with vendors who have direct access to sort, store or transmit their data, she told the reporter.

“She’s found that companies tend to make some mistakes that grant leverage to the other side during negotiations either to strike a new agreement or renew an existing one. One big one is waiting until the last month or so to start the process,” the article reports.

Read the article.

Over the past two years, a growing number of U.S. banks has capped their directors’ earnings, but the ceilings are so high that they primarily serve to fend off potential shareholder litigation rather than control the pace of pay increases, reports Olivia Oran in a Reuters article.

The banks’ caps can be triple what directors now get paid, according to data and filings reviewed by Reuters.

“For the most part, these limits aren’t really going to affect director pay, other than the fact that it’s really just a protection for them,” said Bill Gerek who advises companies on executive pay and governance matters at Korn Ferry. “What’s the cost?”

Oran reports that consultants and lawyers say having any ceiling makes a company less likely to be targeted in a lawsuit from shareholders.

Read the article.

 

 

A law firm in Montgomery, Ala., says it received nearly 26,000 phone calls from people inquiring about a possible link between talcum powder and ovarian cancer after its clients won a total of $127 million in two verdicts earlier this year, reports AL.com.

Beasley, Allen, Crow, Methvin, Portis & Miles, P.C. reported 12,221 open cases from the 25,916 calls it had received as of Thursday. In a statement, the firm said it now has 867 cases filed nationwide against Johnson & Johnson regarding talcum powder products, which plaintiffs have claimed are linked to cases of ovarian cancer.

“In February a City of St. Louis Circuit Court jury awarded the family of Jacqueline Fox $72 million, finding Johnson & Johnson liable for her ovarian cancer that led to her death,” reports Kent Faulk of AL.com. “In May another jury in St. Louis found Johnson & Johnson liable for ovarian cancer linked to genital use of its talcum powder products and awarded a South Dakota woman, Gloria Ristesund, $55 million.”

“Though it’s been discussed as a hypothesis and carefully studied for decades, there is no proven linkage between talc and ovarian cancer,” Gene Williams, outside counsel for Johnson & Johnson, told Legal NewsLine.

Read the article.

 

 

All contractors dread receiving the seemingly inescapable call that a preventable, yet too common, workplace accident occurred such as a crane collapse, the fall of an ironworker, or a delivery vehicle accident, writes James J. Buldas of Pietragallo Gordon Alfano Bosick & Raspanti LLP.

“Besides the human and project costs these accidents bring, claims and lawsuits nearly always follow,” he warns in his article. “While defending claims and lawsuits may cause even the most seasoned contractors to suffer from sleepless nights, responsible parties may take solace in knowing that their counsel negotiated defense and indemnity agreements in their contracts. Why then do such parties sometimes learn that because of the language in an insurance policy, the indemnity clause in the construction contract provides little or no protection?”

Because of unforeseen risk, additional insured endorsements have been revised to link contractual indemnity obligations to additional insured coverage. These new endorsements explicitly limit additional insured status to the indemnity clause of the underlying contract, regardless of whether the endorsement incorporates the “arising out of” or “caused, in whole or in part” language.

Read the article.