DLA Piper has published a paper about the Supreme Court’s ruling upholding a long-standing precedent that restricts the ability of a patent holder to charge a royalty beyond the term of a patent. In a 6-3 decision, the court in Kimble v. Marvel Entertainment declined to overrule Brulotte v. Thys Co., a 1964 decision in which the Court ruled that an obligation to pay royalties for use beyond the expiration of the patent was unenforceable.

“The Court acknowledged that Brulotte restricts a patentee’s and an accused infringer’s right to freely contract to a royalty that runs beyond the patent’s term and noted that extending the term of the patent, in some circumstances, ‘may better allocate the risks and rewards associated with commercializing inventions,’ ” the paper explains.

Kimble turns on the principle of stare decisis.

Read the article.

Chinese companies are increasingly seeking out and paying for intellectual property via licensing agreements with American companies, writes Dan Harris in the Above the Law blog. He lists eight tips to assist American companies looking to secure royalty payments by licensing their IP to Chinese companies.

The list starts with “Protect your IP by registering it,” “Protect your reputation,” and “Be clear about payment.”

It continues with more suggestions, ending with “Choose the right jurisdiction and law for disputes” and “Register the license agreement.”

Each tip comes with a discussion.

Read the article.

Exari presents an on-demand complimentary webinar about how contract visibility will give you the answers to the questions your CEO should be asking.

In a release, Exari said:

The Hub is all about getting organized.

Imagine your CEO comes to you with a question about which contracts carry the most risk. Or asks you to prepare for an M&A event that afternoon. Pretty scary, right?

In this 45-minute live webinar, Exari Co-Founder and Chief Product Officer, Jamie Wodetzki, explain the ins and outs of the Hub and what it could mean for your business.

Because not knowing how to respond to the CEO is scary. But not knowing what’s in your contracts is even scarier.

The presenter is Jamie Wodetzki, Co-Founder and Chief Product Officer at Exari.

Watch the on-demand webinar.

The Texas Supreme Court recently issued a decision in a compression cost case impacting the natural gas production industry in the case of Kachina Pipeline Co., Inc. v. Michael D. Lillis, reports The National Law Review.

The ruling focused closely on the contract language finding that a natural gas transporter could not deduct compression costs and was not entitled to a five-year extension based on the terms of the agreement.

“The Texas Supreme Court affirmed the court of appeals’ judgment reiterating several contract law principles, including (1) in construing a contract, the four corners rule applies and the contract must be examined as whole to ascertain the parties true intent and (2) extrinsic evidence can only be used if a contract is ambiguous.” the Law Review reported.

Read the article.

An article by Stephen M. Proctor of Masuda Funai illustrates the balance courts strike between the policy that disfavors perpetual contracts versus the policy that allows parties freedom of contract. Courts will strike down perpetual contracts but will allow parties to restrict their ability to terminate an agreement.

The article discusses the case of Burford v. Accounting Practice Sales, Inc. and Gary Holmes, which was decided recently in the 7th U.S. Circuit Court of Appeals.

The ruling shows that a party to a contract can limit its ability to terminate a contract except on specified conditions or specified causes, the article says.

Read the article.

Some of the most boilerplate-looking provisions in contracts are often the most onerous, writes Josh M. Leavitt of Much Shelist, P.C.

He gives an example of how indemnity clauses qualify: an indemnifying party (such as a contractor) could find itself owing the indemnified party (such as an owner and its architect) substantial reimbursements and defense costs (including even provision of an attorney) for the defense of third-party claims (such as the claim of a supplier). “This could happen where the indemnifying party (the contractor) was only alleged to have been partially at fault — and even where the contractor may not have been at fault at all.”

He writes that it is important for indemnitors (those giving indemnity rights) and indemnitees (those receiving indemnity rights) to understand the risks involved with these clauses.

Read the white paper.

Mintz Levin has published an article on the proper approach to hiring and negotiation of an employment contract.

The article, written by Jennifer Rubin, points out the similarities between divorce law and employment practice. “Two parties meet (the interview), they realize how many things they have in common (the job requirements and qualifications), and then they fall in love and get married (the job offer and acceptance).”

“There is no doubt that the best time to negotiate the employment terms that are key to a termination is before you ‘walk down the aisle’,” she writes. “While it might seem both counterintuitive, counterproductive and even unromantic to focus on the end of the relationship at the beginning, it is just good business to be practical about a relationship’s end.”

Read the article.

The Illinois Appellate Court tackled one of the most misunderstood issues in the commercial general liability policy: Does an obligation to indemnify trigger insurance coverage? The National Law Review reported on the ruling, writing that, although the facts in Bituminous Casualty Corporation v. Plano Molding Company are not typical for most general liability disputes, the analysis and reasoning of the court are helpful in understanding this pesky part of the policy.

“At issue was a clause in a bill of lading issued by Plano, a manufacturer of storage boxes, in which it agreed to indemnify K-Line, a railroad carrier who was shipping the merchandise, ‘for any injury, loss or damage caused by breach of warranty’ that the cargo being shipped was ‘safe and proper and suitable for handling and carriage,” the report explains.

The court found that “because defendant (the Insured) is liable only for its own breach of warranty, it has not assumed liability for K-Line’s negligence.”

Read the report.

A paper published recently by Finnegan, Henderson, Farabow, Garrett & Dunner discusses a court decision that may have implications for enforcing settlement agreements in litigations when the other party tries to renounce.

“A plaintiff executed a settlement agreement received from the defendants, but later asserted that its acceptance of the agreement was contingent upon the defendants’ execution of the settlement by a specified deadline,” authors of the Finnegan paper explain. “Even though the defendants failed to sign by the deadline, the court enforced the agreement, finding that the signing deadline was not a material term of the settlement.”

The case is Adaptix, Inc. v. ASUStek Computer Inc., in which the plaintiff, Adaptix, executed a settlement agreement received from defendants ASUStek Computer Inc. and Asus Computer International, but later asserted that its acceptance of the agreement was contingent on ASUS’s execution of the settlement agreement by a specified date.

Read the paper.

Many people believe that having a contract with Chinese companies is a waste of time and money because “everyone knows” that China never enforces contracts, writes Dan Harris in a posting on Above the Law.

But there are three reasons why it makes sense to have a contract with your Chinese counterparty, and only one of those reasons is enforceability, he explains.

One reason is to assure that the Chinese company with which you are doing business truly understands what you want of it, he writes. Another reason for having a well-written Chinese language contract with your Chinese counterparty is to convince it that it will be better off complying with your contract than violating it. And the third reason is enforceability.

Read the article.

When allocating risk inherent in a construction project, it is necessary to pay close attention to the interplay between indemnity and insurance to ensure the objectives of the parties are achieved, writes Jeffrey A. Kiburtz of Pillsbury Winthrop Shaw Pittman in a paper published in Lexology.

He writes that each has its advantages and limitations, but can effectively be combined to secure the performance of the myriad participants in construction projects of all complexities.

The paper covers the varying scopes of protection, the timing of performance, and the likelihood of performance.

Read the article.

Merrill DataSite offers a complimentary white paper on building an information governance policy and choosing a contract management system that will comply with your company’s policy needs.

The amount of information businesses require to operate has grown substantially in recent years, Merrill says. This information has created considerable improvements in many critical business functions. But each improvement also comes with new risks, and managing these risks involves a high level of coordination between numerous departments.

Building a good information governance policy helps set the stage for managing the challenges listed above. However, an effective contract management system is critical for a successful implementation of your information governance policy.

The paper, “Three steps to excellence in information governance,” is designed to help you along your path of building an information governance policy and choosing a contract management system that will comply with your company’s policy needs.

Download the white paper.

Parties to maritime contracts frequently include requirements that one or the other party or both of them will use their “best efforts” to perform duties described in the contract, but sometimes it’s unclear what the phrase “best efforts” actually means to them and what a court will say it means should a dispute arise.

Robert Stefani of King, Krebs & Jurgens, PLLC has written a paper describing the practice and discussing two approaches that are evident in the relevant case law. JD Supra Business Advisor posted the article.

He writes that including “best efforts” provisions in a maritime contract can be a good practice, but only if the contract includes guidelines as to what constitutes the party’s “best efforts.”

Read the article.

Just because your company does not contract directly with the government does not necessarily mean you are not subject to the many requirements associated with government contractors, warns Foley & Lardner in a new article.

“Those who provide goods and services to OEMs, or other customers who sell to the government, may also be subject to those requirements,” the article says.

“Many government contractors incorporate by reference Federal Acquisition Regulation (“FAR”) clauses, FAR agency supplemental clauses, or other federal government contracting laws and regulations into agreements with subcontractors and materials supplier.”

Read the article.

Parties to a contract may agree in advance to an amount of money to be paid as damages in the event of a breach – a remedy known as “liquidated damages.”

A paper prepared by Shumaker, Loop & Kendrick and posted on Lexology, discusses the subject in light of some recent litigation involving college coaches and the schools that contracted with them.

“Some coaches succeed in negotiating exclusions to a liquidated damages provision that allow an upward career move (e.g., a coordinator to head coach) or to accept a ‘dream job.’ But even such carve-outs do not necessarily come without controversy,” the Shumaker, Loop authors write.

Read the article.

A posting by by Mike Reilly on the Lane Powell website considers the question: When does the court apply “equitable tolling” to extend the time by which a claimant may file suit beyond the contractual limitations provision?

The article discusses the case of Wilson v. Standard Insurance Company, 2015 WL 3477864 (11th Cir. June 3, 2015)(Equitable tolling rejected even though claim denial letter failed to state date by which civil claim must be brought.)

The 11th U.S. Circuit Court of Appeals found that equitable tolling does not trump the contractual limitations provision.

Read the article.

Mayer Brown has posted presentation slides and video from its recent webinar about increasing the value of sourcing contracts by linking the supplier’s profitability with how quickly and how well the supplier advances your business objectives.

The free webinar is a part of the firm’s Business & Technology Sourcing Webinar Series.

“Incentives can even be used for ‘stretch goals,’ where suppliers would be unable to commit to performance,” the firm says on its website.

Mayer Brown partners Brad Peterson and Linda Rhodes talk about supplier behavior and discuss how to use contract terms to drive exceptional supplier performance. Topics include:

• Use general terms to align incentives for success;
• Set and enforce service levels to drive exceptional performance;
• Implement milestone and other key incentives for projects; and
• Leverage liability provisions and termination rights to drive performance.

View the slides and the video.

The 6th U.S. Circuit Court of Appeals recently predicted that the Kentucky Supreme Court would not allow insurers to sue policyholders for the tort of “reverse bad faith,” reports Carlton Fields Jorden Burt in a report posted on JDSupra.

“The court’s analysis drew a distinction between the duty of good faith and fair dealing that is implied by law into contracts and the distinct, common law duty that arises from a ‘special relationship’ between the parties,” the report says. “Only the latter duty gives rise to a tort claim.  The court also found that no other state has recognized a tort of reverse bad faith.  Yet, given recent interpretations of the contractual duty, it’s arguable that ‘reverse bad faith’ is already here — and what we should be asking is whether it can be of any use.”

The case was State Auto Property & Casualty Ins. Co. v. Hargis. It involved an insurance case that included allegations of arson.

Read the article.

From unwanted business partners to burdensome estate taxes, the death of a business co-owner can have negative implications for surviving owners as well as for the estate of the deceased, reports Fox, Shjeflo, Hartley & Babu in a paper posted on JDSupra.

The paper says a well drafted buy-sell agreement can do double duty as an important tool in both business succession and estate planning, helping to ensure the stability of the business and the financial security of the deceased’s loved ones.

The paper covers topics such as “What is a buy-sell agreement?” “How can a buy-sell agreement help my loved ones in the event that I die?” and “How are buy-sell agreements funded?”

Read the paper.

The Oklahoma Supreme Court found that “Terms of Sale,” hidden on a website and not clearly referenced by the sales agreement, were not adequately incorporated, they were not a proper part of the contract, according to a report by McAfee & Taft and posted on JDSupra.

The report says the court, in Walker v. Builddirect. comTechnologies, Inc., provided guidance on how to properly incorporate extrinsic documents. With this new case in hand, businesses should consult with counsel and make sure their agreements pass muster.

“Counsel can assist with ensuring any extrinsic documents are sufficiently identified and easy to find,” the report says.

Read the report.