China employee non-compete agreements and provisions are an often-litigated area, writes Grace Yang in China Law Blog.

“Many employers (wrongly) assume that they cannot prevail in such a dispute because employees usually win,” she explains. “This belief is not only wrong, but also risky. It is wrong because Chinese courts do not automatically side with the employee; those rare employers that have done things the right way actually usually win. It is also risky because employers with this attitude and approach tend to do an even poorer job of making sure they have a well-crafted contract, complying with the law and preserving good evidence, which are keys to employer success in any employee dispute.”

She describes a case involving China employee non-competes and offers some key lessons to be learned.

Read the article.

Dykema has added government contracts attorneys John C. Dulske and Bryan Kost to its Government Policy & Practice Group in the firm’s San Antonio office. Prior to joining Dykema, both practiced at Dulske & Gluys in San Antonio, which Dulske formed in 2002.

In his practice, Dulske, who joins the firm as senior counsel, focuses on federal procurement litigation, contract administration and claims litigation, as well as bid protest work, including a mix of administrative and appellate work. He has been actively involved in trial practice in San Antonio and South Texas, with experience in both State and Federal Courts, including the United States Court of Federal Claims in Washington, D.C.

Dulske received his J.D. from St. Mary’s University School of Law, and a B.A. in Economics from Kenyon College.

Kost, who joins the firm as a senior attorney, also focuses his practice on federal procurement litigation, contract administration and bid protest work before the Government Accountability Office, the U.S. Small Business Administration and the United States Court of Federal Claims. He has also maintained an extensive trial practice spanning 24 years in both Texas State and Federal District Courts.

Kost received his J.D. from St. Mary’s University School of Law, and a B.A. in American Studies from the University of Texas at Austin.

“John and Bryan’s vast government contracts experience immediately strengthens our Government Policy Practice,” said Sandi Cotter, Director of Dykema’s Regulated Industries Department and Leader of the firm’s Government Policy & Practice Group. “Their expertise in this important field will greatly benefit Dykema and our clients.”

“We are very excited to add such well-regarded attorneys to our San Antonio office,” said Dan Harkins, Office Managing Member of Dykema’s San Antonio Office.

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Murtha Cullina LLP has posted online an on-demand video recorded from a Jan. 27, 2017, webinar on energy performance contracting.

“Energy Performance Contracting is an innovative financing technique that uses cost savings from reduced energy consumption to repay the cost of installing energy conservation measures,” the firm says on its website. “This technique allows building users (municipalities) to achieve energy savings without up-front capital expenses. The costs of the energy improvements are carried by the performance contractor and paid back out of the energy savings. The other major advantage is the guaranteed energy savings for budgetary reasons.”

Watch the on-demand video.

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A report on the website of Low,  Ball & Lynch discusses a case in which the California Court of Appeal addresses whether attorneys’ fees can be awarded when a plaintiff alleges both tort and contract causes of action and dismisses the entire complaint before trial.

In the case, Neeshat S. Khan v. Michael Shim, “The Court of Appeal concluded that when a plaintiff voluntarily dismisses an action involving both contract and tort claims, Civil Code § 1717(b)(2) does not preclude a defendant from recovering attorneys’ fees if the fee provision is broad enough to cover the tort claims.”

The article concludes that parties need to pay particular attention when drafting fee provisions when contract and tort claims may be brought together. “For cases with a fee provision, a liability analysis regarding the impact of attorneys’ fees should be assessed when determining whether to voluntarily dismiss a case,” in says.

Read the article.

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A survey report released by Baker McKenzie reveals it is critical to understand what parts of the cloud contract are negotiable and what is not, particularly in newer portions of the marketplace that have greater variance in solutions and contracting terms, the firm reports on it website.

“The survey report, now in its third year, highlights the top objectives, hesitations, and criteria that buyer respondents factored into their cloud procurement determinations,” the firm says. “These factors are almost identical to the responses from cloud providers, potentially indicating further convergence in the marketplace.”

“Our survey results indicate that there may be convergence in the more established parts of the cloud marketplace, such as Software-as-a-Service, but less so in others, such as Infrastructure-as-a-Service and integration with machine-to-machine/Internet of Things solutions,” said Peter R. George, a Partner in Baker McKenzie’s TMT Group.

Read the article.

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Narges Kakalia of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo asks and then answers some pointed questions about arbitration in an article on the firm’s ADR Advice website.

“Is an arbitration clause mandatory or permissive when it provides that either party to the contract may elect to submit a dispute to binding arbitration? What if the contract also provides that the right to arbitrate is not exclusive of any other rights that a party has to pursue legal action in an appropriate forum? Such an arbitration clause certainly sounds permissive. But courts have invested a lot of ink addressing the question, and (spoiler alert!) they have more or less consistently come to the conclusion that such a clause makes arbitration mandatory if any party chooses it,” she writes.

She explains that many litigants and their lawyers misinterpret the real meaning fo the word “may” in this context.

Read the article.

The Association of Corporate Counsel, the world’s largest community of in-house counsel, will stage the ACC Mid-Year Meeting in New York on April 2-4, 2017.

The event will be at the New York Marriott Marquis Hotel. General Counsel News readers may receive a $200 discount on the registration fee if they register by Feb. 20.

An ACC release says the meeting will help participants prepare for changes in the regulatory landscape with sessions on:

• The impact of evolving regulations and enforcement trends on contracts
• Current and most controversial changes in employment law
• Reducing financial sector regulatory risk

Other activities will include:

• Engage directly with expert faculty
• Connect with your peers through multiple networking opportunities
• Have the opportunity to earn 12-14 CLE/CPD (1 credit Ethics eligible), 14 CCB CEU credits, and 3-4 CPE credits

Register for the meeting.

eSignLive by Vasco will present a complimentary one-hour webinar providing practical evidentiary considerations of electronic records and signatures and guidance on how to reduce your risk.

The event will be Tuesday, Feb. 7, 2017, beginning at 2 p.m. Eastern time.

Organizations undergoing digital transformation often have legal questions related to moving paper-based business processes online without introducing new risks. Beyond the minimum requirements for electronic and digital signatures set forth in the laws, addressing the risk of fraud, repudiation and compliance is of utmost importance as well. In the event of a regulatory audit or legal dispute, avoiding fines and ensuring admissibility is dependent on a company’s ability to produce convincing, reliable evidence.

Presenters will be Pat Hatfield, Partner at Locke Lord LLP, and Andrea Masterton, Corporate Marketing Director at eSignLive.

Highlights will include:

• A brief overview of e-sign legislation
• Insights gained from relevant case law
• How e-signature laws overlay with existing commercial and industry regulations
• The challenges of defending electronic transactions
• A live demonstration of ‘best practice’ e-signature audit trails & process evidence

Register for the webinar.

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Dentons has published the latest edition of its “Government Contracts Legislative and Regulatory Update,” a summary of the relevant changes that took place during December.

Highlights this month include:

• President Obama signed into law legislation which extends and cements whistleblower protection for certain contractor employees
• FAR Council issues final rule amending the FAR in response to injunction of certain Fair Pay and Safe Workplaces rules
• DoD issues class deviation regarding controversial IR&D costs rule
• FAR Council issues final rule mandating privacy training for contractor employees privy to PII

Read the update.

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Moving business processes online without introducing new risks is not a simple task. The fraud, repudiation, admissibility and compliance risks are challenging enough to address when executing transactions on paper. If not done properly in the electronic world, these risks can be far greater. This paper discusses how a well-designed process, supported by new-generation electronic signature technology, can actually reduce risk and increase the enforceability of e-transactions compared to paper processes. (See the download form below.)

This paper explains how eSignLive addresses the top six risks of bringing processes online as identified by leading
e-commerce law firm, Locke Lord LLP, which has guided Fortune 500 companies in the design and implementation of
electronic signature processes:

1. User Authentication Risk: “This Isn’t My Signature”
2. Repudiation Risk: “That’s Not What I Signed”
3. Admissibility Risk: “Objection, Your Honor”
4. Compliance Risk: “I Never Saw That”
5. Adoption Risk: “Am I Done Yet?”
6. Relative Risk: “How Does It Compare to PAPER?”

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Sometimes there’s a disconnect between “fairness” and the “justice” that is doled out by the legal system. One notable exception is the application by the courts of the concept of “the implied covenant of good faith and fair dealing,” writes David Allen of Jaburg Wilk.

Every contract consists of one or more express agreements, legally referred to as “covenants” between the parties, Allen explains. But inherent in every contract is also an unwritten “implied” additional covenant that is not expressly set forth; namely, the implied covenant of good faith and fair dealing.

In his article, he explains the obligations mandated by the implied covenant and how courts can be expected to enforce them.

Read the article.

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Among the many subjects to receive President-elect Trump’s attention in coming days are venerable defense contractors and their performance of major systems contracts, points out an article published in Covington & Burling LLP’s Inside Government Contracts.

Sandy Hoe and John Sorrenti write that a president always can pressure high-profile government contractors to “voluntarily” take actions to their detriment and in favor of the government, but what legal tools or contractual remedies are available if a president forces a particular outcome?

“From a purely legal standpoint, however, the Administration’s powers are circumscribed by the remedies available to contractors and challenges that prospective offerors can bring through the bid protest process.” the authors content.

Read the article.

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It generally is a defense to a breach of contract claim if the defendant proves that the plaintiff was the first one to materially breach the parties’ agreement, writes Shep Davidson for The In-House Advisor.

He discusses a recent Massachusetts Superior Court case illustrating how a plaintiff seeking to enforce a post-employment restrictive covenant can avoid falling victim to such a defense – if the company has a carefully crafted agreement is in place.

In his article, he outlines the lessons for in-house counsel, advising how a well-drafted contract can eliminate a potential defense that could thwart an otherwise well-conceived restrictive covenant.

Read the article.

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Most contracts prose is dysfunctional, but training is available to help contracts professionals draft clearly and concisely. But that gets you only so far; you also have to supplement training with centralized initiatives, write Chris Lemens and Kenneth A. Adams for the Association of Corporate Counsel.

They discuss the style of writing in most contracts (“fundamentally flawed”) and consider what is required to produce clear, concise contracts (training and guidelines).

In their article, some of the advice they discuss includes: lose the archaisms, gain control of verbs, stop using the phrase “best efforts,” and don’t rely on mystery usages.

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The U.S. Supreme Court has agreed to decide whether companies can use employment contracts to prohibit workers from banding together to take legal action over workplace issues, reports The New York Times.

Adam Liptak writes that the court will consider three cases that follow a series of Supreme Court decisions endorsing similar provisions, generally in contracts with consumers. The question for the justices in the new cases is whether the same principles apply to employment contracts.

“In both settings, the challenged contracts typically require two things: that disputes be raised through the informal mechanism of arbitration rather than in court and that claims be brought one by one,” Liptak writes. “That makes it hard to pursue minor claims that affect many people, whether in class actions or in mass arbitrations.”

Read the NYT article.

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A new article in CoinDesk provides an overview of the ongoing issues with smart contract development, selecting just three that could remain barriers to mainstream use.

“With more than $17bn in assets stored in just the top 10 cryptocurrencies, there currently is a huge opportunity to give existing blockchain assets additional flexibility and utility by adding smart contract capabilities,” write CEO Arthur Breitman, and COO Kathleen Breitman of Tezos.

The three ways smart constract systems can earn our trust in 2017: Provide formal verification capabilities, ensure transparency so code can be inspected, and provide a clear governance mechanism.

Read the article.

Pierre Mitchell, writing for Spend Matters, continues his series on artificial intelligence (AI) in contract management by discussing AI and knowledge representation.

“Intelligence is meaningless without knowledge, and vice versa. Albert Einstein as a baby (high intelligence, low knowledge) would be as bad at chess as Wikipedia (high knowledge, low intelligence),” he explains. “Expertise is built on knowledge that adequately models the richness of a certain domain, but high intelligence allows the knowledge to be more effectively and efficiently applied to solve problems.”

He adds his “second main step in a CLM journey is to ‘derive key intelligence from within your contract data … to decipher the legalese down to a granular contract clause level (including metadata).'”

Read the article.

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Stacey Lantagne writes in ContractsProf Blog about an interesting dispute over a non-compete provision that resulted in a preliminary injunction.

The plaintiff in Our Town v. Rousseau operates a community publication called “Our Town.” The defendants in the case entered into a contract to franchise the “Our Town” brand in a county in New Jersey, with a non-compete provision limiting similar businesses or names for three years, and within 50 miles.

The plaintiff later learned that the defendants were operating a similar publication called “Home Town” in the franchise location and sought a preliminary injunction.

Lantagne explains how the court came to grant the injunction.

Read the article.

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By Christopher Barnett
Scott & Scott LLP

Companies with experience licensing Microsoft software and services through Enterprise Agreements know that small forests could be felled to produce the paper required for the typical document stack. EAs often incorporate a dozen or more different components, including some or all of the following:

• Microsoft Business and Services Agreement or Microsoft Business Agreement (Microsoft sometimes will agree to use existing master agreements)
• Online Services Supplemental Terms and Conditions (if an existing, older-form master agreement is to be used)
• Enterprise Agreement (Microsoft sometimes will agree to use existing base EAs)
• Enterprise Enrollment
• Customer Price Sheet
• Product Selection Form
• One or more custom terms amendments (if custom terms have been negotiated)
• One or more standard-form amendments (to cover product-specific or service-specific matters for which Microsoft offers off-the-shelf terms)
• Product Terms (typically incorporated by reference)
• Online Services Terms (typically incorporated by reference)
• Service Level Agreement for Online Services (sometimes incorporated by reference)
• Supplemental Contact Information Form
• Tax Terms and Conditions Form
• Signature Form

Many of the standard forms are administrative in nature and rarely incorporate substantive terms or conditions. However, Microsoft occasionally will incorporate substantive or potentially substantive language in forms that otherwise would appear to have only administrative purposes. A good example is the Customer Price Sheet (CPS).

The primary purpose of the CPS is to list the products and services being ordered under an EA, the order quantities, and the prices to be paid. The CPS also typically identifies the prices that will apply to true-up orders during the term as well as end-of-term buy-out prices for subscription licenses.

Toward the end of the CPS, there usually are included sections labeled “Product Notes” and/or “Terms and Conditions.” Ideally, those sections should be used exclusively to help navigate the CPS and to clarify any custom license metrics that may apply to the EA transaction. However, Microsoft sometimes will include language in those sections that should be the subject of legal negotiations or even that contradicts substantive terms that may have agreed in a custom terms amendment. For example, the parties may reach a special agreement regarding the mechanics for placing incremental true-up orders, but the notes in the CPS may reference standard true-up procedures. This can be especially problematic in time-sensitive negotiations, because the CPS often is among the last documents to be finalized for legal review and approval.

Businesses neglect a thorough review of all EA document components at their peril. Business and legal teams need to push early and often to insist that Microsoft circulate final-form versions of each and every part of the document stack as soon as possible to ensure a smooth transaction. Those teams also need to be prepared to scrutinize every page of that stack to ensure that there are no surprises that are inconsistent with the business’s expectations.

John M. Newman of the Cecil C. Humphreys School of Law at the University of Memphis has compiled a guide to drafting for dispute resolution, covering mandatory-arbitration provisions, class waivers, choice of law, choice of venue, exculpatory and liquidated-damages clauses, fee and cost allocations, and more.

He writes that some defendant-friendly U.S. Supreme Court decisions, critical coverage in the popular press, and efforts by federal agencies to stymie the private sector’s increasingly widespread use of contractual dispute-resolution provisions have made the topic particularly timely.

“In light of the growing importance of dispute-resolution provisions, this guide seeks to concisely identify and explore, from a transactional perspective, the relevant questions, considerations, and law relating to these powerful tools,” Newman writes. “It also provides illustrative examples of well-drafted provisions, often drawn from real-world legal instruments. The target audience includes practitioners, scholars, businesspersons, and other analysts seeking to learn and apply best practices when planning and drafting for dispute resolution.”

Read the article.

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