Corridor Company has posted an on-demand webinar recording describing the best practices for managing contractural obligations.

“Contract management has become an increasingly strategic initiative,” the company says on its website. “Key to its strategic nature is the management of the obligations contained within the contract. Whether it’s the deliverables due to your customer or those due to you, it’s vital that these obligations are properly tracked and managed. Failure to do so not only creates tremendous organizational risk, but also impacts compliance, profitability and overall customer satisfaction.”

In this session, Corridor Company CEO, Russ Edelman, discussed best practices for managing your contractual obligations. He examined general considerations as well as detailed options for managing these obligations within a contract management tool.

Topics included:

• The Key Steps of Obligation Tracking
• Proper Classifications
• Automation Considerations

Watch the on-demand webinar.

Corporations seeking to avoid enforcement of foreign judgments they contend are based on corrupt proceedings may have a new weapon now, thanks to a ruling by a federal appeals court over Chevron’s long-running Ecuadorian pollution litigation, reports BloombergBusinessWeek.

The court affirmed that a lawyer for victims engaged in wrongdoing to secure a $9.5 billion verdict in the South American country.

“The decision hands well-heeled corporations a template for avoiding legal accountability anywhere in the world,” says Deepak Gupta, the lawyer representing Steven Donziger, the controversial New York attorney who has been battling Chevron over pollution liability in Ecuador for decades.

Paul Barrett explains that “the case began with pollution in oil fields operated by Texaco Inc. in the rain forests of Ecuador in the 1970s and 1980s. In 1993, Donziger and other U.S. lawyers sued Texaco in New York on behalf of villagers and indigenous tribe members. Chevron acquired Texaco and its potential liabilities in 2001. The pollution case was dismissed by U.S. courts and restarted in Ecuador in 2003.”

Read the article.

Reuters is reporting that a federal appeals court rejected a one-time Florida billionaire’s bid to revive his $800 million lawsuit accusing Citigroup Inc. of fraudulently hiding its exposure to subprime and other toxic mortgages, inducing him to hold on to shares he otherwise would have sold.

The 2nd U.S. Circuit Court of Appeals in Manhattan said Citigroup and former officials, including two chief executives Charles Prince and Vikram Pandit, were not liable to trusts and corporate entities overseen by Arthur Williams and his wife, according to the report by Jonathan Stempel.

“Williams, the founder of what became Primerica Financial Services, has said he had planned in May 2007 to sell his 17.6 million Citigroup share stake, but decided to sell just 1 million because the bank assured investors it was in good shape,” the report says. but the assurance proved faulty, as the share price declined, with Williams saying he lost “the financial benefit” of his life’s work.

Read the article.

Regardless of whether the publisher is Microsoft, Adobe, Autodesk, Oracle, IBM or any of their trade groups including the BSA | The Software Alliance, Robert Scott of Scott & Scott LLP sees common issues.

In a new online publication, he identifies some of those common issues, which include audit effective date, scope, discovering the installations, identifying proof of licenses, interim confidentiality / 408 agreements, calculating financial exposure, what constitutes a good settlement, and confidentiality.

On the issue of scope, Scott writes: “Narrowing the scope of a requested audit is one of my first priorities in a software audit case. I like to think of scope in a number of different ways all with an eye toward narrowing the number of devices to be investigated as much as possible at the outset of the case. Scope limitations could be to certain business units or affiliates, certain geographic locations, certain products, certain purchasing agreements. Winning the scope battle is an early success factor in an audit case.”

Read the article.

Reuters is reporting that two business groups have sued the Obama administration over a crackdown on U.S. companies that try to reduce their U.S. taxes by rebasing abroad in a process known as inversion.

Plaintiffs in the suit filed in a federal court in Texas are the U.S. Chamber of Commerce and the Texas Association of Business. They claim that a U.S. Treasury Department regulation enacted in April exceeded the department’s authority.

“The lawsuit was the first to challenge a rule on inversion,” write David Ingram and David Morgan. “The deals are legal, but have drawn criticism from some politicians who say U.S. companies that do them are avoiding their tax obligations. A wave of inversions largely ended after Treasury moved against the deals.”

The rule helped scuttle what had been a planned $160 billion combination of Allergan and U.S. drugmaker Pfizer Inc in what would have been the largest inversion ever, the report says.

Read the article.

In Nghiem v Dick’s Sporting Goods, Inc.,  the Central District of California held browsewrap terms to be unenforceable because the hyperlink to the terms was “sandwiched” between two links near the bottom of the third column of links in a website footer, write Jeffrey Neuburger and Daryn A. Grossman in Proskauer Rose LLP’s New Media and Technology Law Blog.

“Website developers – and their lawyers – should take note of this case, part of an emerging trend of judicial scrutiny over how browsewrap terms are presented,” they explain. “Courts have, in many instances, refused to enforce browsewraps due to a finding of a lack of user notice and assent. In this case, the most recent example of a court’s specific analysis of website design, a court suggests that what has become a fairly standard approach to browsewrap presentment fails to achieve the intended purpose.”

The authors discuss that case in detail, as well as some other browsewrap cases.

“These recent cases should prompt companies to reexamine electronic contracting practices to ensure that consumers are offered notice sufficient to understand that use of a website will constitute agreement to the terms,” according to the article.

Read the article.

Owners who are dissatisfied with their contractors’ performance increasingly assert fraud-based claims in addition to breach of contract claims because fraud-based claims are not typically barred by contractual waivers and limits of liability, according to a client alert published by Pepper Hamilton.

“Fraud-based claims may also create the potential for punitive damages in addition to compensatory damages,” wrote the authors, Ralph A. Finizio, Robert A. Gallagher and Jane Fox Lehman. “Contractors and their counsel, however, can limit their potential exposure for fraud-based claims through careful contract drafting and thoughtful selection of the law to be applied to disputes.”

They wrote that contractors should first consider: the codified law of the jurisdiction where the project is to be built, statutes that regulate the availability of punitive damages, and differences in common law.

“Contractors should also keep in mind that their choice of law will likely impact the conduct and cost of any litigation, as well as the best choice of outside counsel to handle the matter,” they wrote.

Read the article.

CNBC is reporting that Wal-Mart is eyeing a potential acquisition of Jet.com, an online retailer created to challenge Amazon, according to a Dow Jones report citing people familiar with the matter.

“Though it isn’t clear how much the world’s largest retailer would cough up for Jet, a personal familiar with the talks told Dow Jones that the website could be worth $3 billion, the organization reported Wednesday,” according to CNBC.

The report by Krystina Gustafson adds that one-year old Jet.com has raised more than $500 million in funding in its quest to dethrone Amazon, according to CrunchBase.

Read the article.

A patent-holding company that won a huge court victory against Apple had its victory wiped out, and its stock plunged by more than 40 percent, reports Ars Technica.

Earlier this year, in a jury trial in East Texas, Nevada-based VirnetX won a verdict for $625.6 million against Apple. VirnetX alleged Apple infringed on four of its patents, which are said to cover Apple’s VPN on-demand feature, as well as FaceTime. But the federal judge who heard the trial has now vacated the verdict and ordered a new trial for September.

But the judge “said that the complex, consolidated trial, as well as repeated references to an earlier trial in which Apple was found to have infringed VirnetX patents, created ‘potential for juror confusion’ and unfairly prejudiced Apple,” according to the report by Joe Mullin. “The judge quoted a VirnetX attorney reciting an argument he viewed as potentially prejudicial.”

Read the article.

When Warren Buffett and Berkshire Hathaway Inc. bought Portland, Oregon-based Precision Castparts Corp. for $37 billion early this year, the investor acquired the services of Precision’s hard-charging CEO, Mark Donegan.

According to a Bloomberg profile by Noah Buhayar, Donegan is “a low-profile CEO with a great track record, relentless about staying ahead of the competition. During the 13 years he led Precision as a publicly traded company, its stock climbed 20-fold, annual revenue quadrupled to $10 billion and he bought dozens of businesses, consolidating a position as a key supplier to Boeing Co., Airbus Group SE and General Electric Co. It helped him attain a cult status among investors.”

“Behind the numbers, though, something more brutal is going on,” the profile continues. “For years, Donegan has traveled the globe, sometimes bullying staff during quarterly reviews at Precision plants.” And sometimes those reviews included profanity and threats.

Read the article.

A group of 12 prominent corporate executives and financial leaders recently a discussion of common-sense principles companies and boards of directors can use to follow the best practices of corporate governance.

The leaders included Warren Buffett, CEO of Berkshire Hathaway, and Jamie Dimon, CEO of JPMorgan Chase & Co. Others were chief executives of General Electric, General Motors, Verizon, BlackRock, Vanguard, and more.

Topics include the independence and diversity of corporate boards, breaking away from the obsession with quarterly financial forecasts, accounting standards, and engagement between a company and its shareholders.

“Their stated goal was to offer a set of recommendations on which they found common ground, in the hope of promoting further conversation on corporate governance and ultimately stimulating economic growth,” as described by The New York Times. “Indeed, the principles appear premised on the crucial, if understated, connection between effective corporate governance and economic prosperity. In that regard, they reflect the frustration that governance-based debate among investors, corporate leaders and other stakeholders has failed to produce the kind of change needed to support economic strength.”

Download the principles.

Apple Inc. has asked the U.S. Supreme Court to clear the way for the iPhone maker to secure hundreds of millions in damages from Samsung Electronics Co Ltd in a case over smartphone design patents, Reuters is reporting.

The feud over smartphone patents dates back to 2011, when Apple sued Samsung in a northern California court alleging infringement of the iPhone’s patents, designs and trademarked appearance.

“In its legal brief on Friday, Apple said Samsung had not provided evidence to support its argument that design patent damages should be decided on one component of a smartphone, rather than the entire product,” reports Dan Levine for Reuters. “Apple said there was no need for the Supreme Court to send the case back to a lower court for further proceedings.”

Samsung is facing a judgment of $548 million, of which $399 million involves design patents.

Read the article.

The Economist asks a straight-forward question about a new relatively contract technology: If smart contracts can be made to work, how automated should business ultimately become?

The article discusses the history of smart contracts since the term was coined in 1994, through the recent debacle of Ethereum’s “Decentralised Autonomous Organisations” venture capital fund that was hacked to the tune of $50 million.

“So far, IT has mainly replaced paper processes,”the article says. “Smart contracts mean a different order of automation: economic transactions are put on auto-pilot. True believers want them to do away entirely with intermediaries, from banks to governments. But they should be careful what they wish for. If smart contracts spread widely, you would take away much of the flexibility that smooths the economy’s functioning. Real-world institutions can adjust when things go wrong. For many years to come, and perhaps for ever, human institutions, flawed though they are, will be a smarter bet than relentless, bug-ridden code.”

Read the article.

Image by Mike Mozart

Sports Authority’s creditors and the Justice Department have challenged the fading retailer’s plans to pay top executives as much as $2.85 million in bankruptcy bonuses, according to a Dow Jones Newswires report in The Denver Post.

Sports Authority once operated 460 athletic-gear but filed for bankruptcy protection and began going-out-of-business sales in an effort to pay its debts. As the liquidation entered its final weeks, Sports Authority unveiled plans for bonuses for four unnamed top executives.

“The bonus money is needed to encourage the executives to do their best in the company’s final days, according to Sports Authority’s lawyers. Confidentiality is appropriate to protect morale, and prevent competitors from using the pay data to lure Sports Authority’s leaders away, the company contends,” the report says.

Read the article.

The U.S. watchdog for consumer finances unveiled on Thursday a proposal to toughen regulation of the multibillion-dollar debt collection industry, with a focus on keeping agencies from pushing people to pay debts they do not owe, informing borrowers of their rights and cutting down on calls to debtors, according to a Reuters report.

Industry advocates expressed concerns about the costs of complying with the suggested requirements, which they warned could be passed on to borrowers or force some of the thousands of small collection firms to shutter. “Those pushing for consumer rights said the proposal left major holes in borrower protections and did not go far enough,” wrote Reuters’ Lisa Lambert.

She also reported that the proposal covers third-party collectors and debt-buyers. The CFPB will address first-party collectors and creditors, such as banks with their own collection departments, in the future.

Read the article.

Although Theranos’s history — which includes several administrative penalties for the troubled blood-testing company — has received an outsize amount of media attention, its experience with regulatory agencies highlights several important issues for start-up and emerging health care entities, writes Robert E. Wanerman in Epstein Becker & Green‘s Health Law Advisor blog.

He discusses four major questions raised in this type of case, with these headings: What Do Regulators Want?, What Do Health Care Providers and Payors Want?, Who Is Investing in the Venture?, and Who’s on Board?

On the first point, he wrote that “even in an environment that encourages innovation, health care organizations must understand the scope of regulatory oversight at the federal and state levels, and the range of remedies available to regulators for noncompliance. Every organization should also have a protocol in place for responding to regulatory inquiries or inspections.”

Read the article.

By Stephen F. Pinson
Scott & Scott, LLP

Indemnification is a very important provision in a software agreement. It transfers legal risk between contracting parties, and the indemnification provision acts like an insurance policy for future lawsuits where a contracting party is sued by a third-party to the contract. Because this provision is a risk transfer mechanism, it is crucial to understand it and to successfully negotiate it to prevent unwanted risk.

Before we jump into how to negotiate an indemnification provision, there are some basic definitions that need to be understood:

• An Indemnitee is a contracting party who is entitled to be indemnified.
• On the other hand, an Indemnitor promises to defend, indemnify, and hold harmless the Indemnitee against liability from a third person, or against loss resulting from liability.
• A third-party is a person or entity that is not a party to the original contact, but who sues one of the contracting parties.

So how does an indemnification provision operate? Typically, an indemnification provision is triggered when a third-party to the contract brings a claim against one of the contracting parties (i.e., contracting party vs. third-party claimant). Very rarely, is it triggered when there is a direct party claim (i.e., contracting party vs. contracting party). At its core, an indemnification provision allows the party who is responsible for liability (the Indemnitee) to transfer his loss or liability to another party who will represent them in court (the Indemnitor), and pick up the litigation costs and liability from a third-party who bring a lawsuit against the Indemnitee.

One of the major pitfalls in negotiating an indemnification section is contained in the structure of the contract provision itself and the intent of the software licensor. Many contracts include boilerplate language, thus, contract negotiators must develop a systematic way to review the language and then develop a strategy to address the indemnification section for their side of the deal. To do this, the parties must first understand the risks involved with a particular software license and negotiate for the specific risk type.

The best way to put this into action is to review the indemnification section and put the language into more concrete roadmap to negotiate the contract by asking the following questions: (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.

I will discuss each one of these questions in upcoming blogs.

Remember, an indemnification section is a specialized risk transfer section of 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.

Microsoft is facing two lawsuits seeking class-action status related to the company’s campaign to get people to use Windows 10, reports The Seattle Times.

A suit in U.S. District Court in Florida alleges Microsoft’s Windows 10 update prompts violated laws governing unsolicited electronic advertisements, as well as Federal Trade Commission prohibitions on deceptive and unfair practices. And a suit filed earlier in Israel, also seeking class-action status, alleges Windows 10 installed on Windows users’ computers without their consent, in violation of Israeli law.

“The lawsuits follow complaints from Windows users and longtime Microsoft watchers for what some said were pushy or deceptive prompts to update to Windows 10,” writes The Times‘ Matt Day.

Read the article.

Gibson, Dunn & Crutcher has posted an on-demand webinar discussing the rise of the U.S. Consumer Financial Protection Bureau (CFPB) enforcement efforts, the expansion in the scope of industries targeted and the level of penalties imposed, and the targeting of financial products that the CFPB has deemed cybersecurity risks.

On its website, the firm says the webinar covers challenges the CFPB raises for compliance professionals and in-house litigation counsel.

Panelists experienced in bank regulatory, white collar defense and investigations, securities litigation and investigations, and cybersecurity discuss these and other developments at the CFPB as well as approaches for navigating this uncertain regulatory and legal landscape.

Watch the on-demand webinar.

The U.S. Department of Justice has filed lawsuits to block the proposed mergers of four of the nation’s five biggest health insurers, reports The New York Times.

The proposed mergers involve Aetna and Humana, and Anthem and Cigna.

U.S. Attorney General Loretta E. Lynch said the proposed mergers “would leave much of the multitrillion-dollar health insurance industry in the hands of three mammoth insurance companies.”

“If these mergers were to take place, the competition among insurers that has pushed them to provide lower premiums, higher-quality care and better benefits would be eliminated,” she said.

“The companies responded by vowing, in varying degrees, to fight the government’s challenge,” report Leslie Picker and Reed Abelson. “Aetna, which had hoped to gain an advantage by being the first to reach a deal, aggressively defended its proposed merger, which it contended was different from the larger Anthem-Cigna deal that followed.”

Read the article.