Reuters reports that U.S. District Judge John Lungstrum of Kansas City has set aside individual contingency fee contracts that some plaintiffs’ lawyers had in place for clients in a multidistrict litigation.

The ruling rejected the claims of Watts Guerra, a Texas firm that had signed up tens of thousands of farmers to bring individual cases in state court, accusing the agricultural giant Syngenta of peddling genetically modified seeds that produced corn China refused to import. The case led to a $1.5 billion global settlement for the U.S. farmers, according to Reuters’ Alison Frankel.

“This court has the authority and duty to determine the amount of reasonable fees paid to attorneys from the settlement fund, and because any further contingent fee payments would necessarily come from proceeds from the settlement fund, the court can and does prohibit any such additional payments,” Lungstrum wrote in the opinion.

Read the Reuters article.

Employees are the engine that drives a manufacturer’s innovations, but employees’ potentially patentable innovations only become the employer’s intellectual property if the proper patent assignment language is used, warns Foley & Lardner in its Manufacturing Industry Advisor blog.

Authors Christopher King and Richard Dancy explain:

“All employees that may develop potentially patentable innovations during the course of their employment should be required to sign contracts transferring ownership of all intellectual property rights to their employer. This may even include factory employees who submit ideas for product improvements through an employee suggestion program. However, if employee patent assignments are not carefully crafted, manufacturers may end up in a nightmare situation – believing they own a valuable patent invented by an employee when, in reality, it belongs to the employee.”

Read the article.

Non-compete agreements are subject to state law, and states vary in their treatment of them. There is no one-size-fits-all non-compete agreement, and the enforceability of a non-compete agreement turns upon the state law under which it is construed, points out a blog post from Knobbe Martens.

A case in point involves two high-end, off-price fashion brands are duking it out over an employee jumping ship, write authors Alexander D. Zeng and Mark Kachner.

“Generally, states that are more willing to enforce non-compete provisions do so for countervailing policy reasons: to prevent trade secret misuse, reduce the cost of trade secret litigation, protect employers’ investments in employees, and favor freedom of contract. The outcome of this lawsuit will be heavily impacted by the state law governing Arcuri’s non-compete agreement.”

 Read the article.

Kilpatrick Townsend & Stockton has published a structured guide to outsourcing in the USA.

The guide covers contract forms, due diligence, duration and renewal, supplier selection, service specifications, charging methods, warranties and indemnities, and ending the agreement.

Authors of the guide, which is published at Lexology.com, are James Steinberg, Joshua M. Benson, Farah F. Cook, Joshua S. Ganz, Julie C. Grundman, Maha Khalaj, Lance McCord, Michelle Tyde, Amanda M. Witt and Vita Zeltser.

Read the article.

An Ohio appellate court has addressed an issue that arose when an arbitrator specified in a contract is no longer available.

Pepper Hamilton’s Constructlaw blog covers the case in which a homeowner sued a contractor, alleging unjust enrichment and fraud. The contractor moved to compel arbitration under the agreement arbitration provision. But the specified arbitrator, the Ohio Arbitration and Mediation Center, appeared to be defunct.

“Because it was still possible to arbitrate the issues, the Court determined the agreement was not unenforceable due to impossibility,” writes Ryan R. Deroo. “The Court explained that this conclusion was consistent with the intent of the parties as they agreed to arbitrate disputes, and a change in forum should not override the fundamental purpose of the arbitration provision.”

The appellate court directed the trial court to appoint another arbitrator.

Read the article.

Image by NY Photographic

Squire Patton Boggs warns that a recent decision by the Fifth Circuit Court of Appeals in In re Provider Meds, L.L.C. is a stark reminder to chapter 7 trustees that they have an affirmative obligation to examine a debtor’s assets.

A trustee’s failure to conduct a sufficient and timely examination may deprive the estate of significant value, writes Mark Salzberg.

“The issue before the Court in Provider Meds was whether the assumption and assignment of an intellectual property license agreement . . . conveyed any intellectual property rights since the Agreement had not been timely assumed by the trustee,” Salzberg explains.

Read the article.

A California appellate panel determined that a law firm’s arbitration agreement with a partner was unconscionable, reversing a trial court’s grant of a motion to compel arbitration in an employment dispute, according to a post on the website of Manatt, Phelps & Phillips.

In the case, a litigator who had been employed at Winston & Strawn sued the firm, asserting claims of discrimination, retaliation and wrongful termination. A trial court granted the firm’s motion to compel arbitration.

“The arbitration provision in the employment agreement signed by [the plaintiff] failed to meet the standard of Armendariz v. Foundation Health Psychcare Services, Inc., the court said, and was unconscionable. Further, the taint of illegality could not be removed by severing the unlawful provisions without altering the nature of the parties’ agreement, leading the panel to void the entire agreement and send the case back to Superior Court.”

Read the article.

In contracts about complicated services, the hardest terms to draft appear in statements of work, according to a post on the website of Tech Contracts Academy.

“SoW’s for large projects demand long lists of duties from the vendor,” explains author David W. Tollen. “And usually they’re interwoven with supporting tasks from the customer, along with countless contingencies, assumptions, and exceptions. Putting all those pieces into an effective contract challenges the best drafters. The result is often hundreds of pages of baffling mess. Yet the path to good drafting is surprisingly simple: write outcome-driven descriptions. In other words, describe the technology the vendor will create or run or both, and then stop typing.”

The most effective statements of work, Tollen writes, will focus on the outcome — on specifications for the technology to be built or run — and minimize restrictions on how.

Read the article.

The standards for determining when a party waives its right to arbitrate through participation in litigation have never been uniform among the circuits or easily applied writes John Lewis in BakerHostetler’s Employment Class Action Blog.

He discusses the recent Fifth Circuit opinion in Forby v. One Technologies, L.P., which illustrates the difficulty of applying the “prejudice” requirement in a consumer fraud and unjust enrichment class action.

In reversing a district court ruling, the appellate court highlighted some analytical problems that apply equally in the employment law context.

Read the article.

Like all contracts, operating agreements — which are celebrated for allowing business partners to freely define their relationship by contract — can be amended and modified, according to a post in The LLC Jungle.

Author Kevin Brodehl discusses a recent opinion from the Supreme Court of New York that illustrates how the process of amending an LLC’s operating agreement can sometimes be used to gain the upper hand in a dispute between members.

The case involves a majority of members amending the operating agreement to remove the manager and escalate capital calls.

Read the article.

The end of the year brings an onslaught of China Employer Audits, and with those audits comes an onslaught of China employment law questions, writes Grace Yang in the Harris Bricken China Law Blog.

She discusses some of the most commonly asked questions on China employment contracts and provides short answers to each of them.

The issues include using an English version of contracts, contract templates provided by Chinese labor authorities, termination of signed China employment contracts, open-term contracts, offer letters, and the need to review contract templates.

Read the article.

In an ABA Journal column, Bryan Garner explores the curiosity of “busts”—the prevalence of contractual provisions, sometimes perpetuated in deal after deal, that make no literal sense at all.

“That they exist at all is something of a marvel. After all, you’d think that transactional lawyers would adopt a protocol of reading and rereading each contract that goes out the door,” he writes. “Given that critical thinking and close reading are prized habits for lawyers, contradictory or outright nonsensical provisions should be exceedingly rare. Alas, they’re not.”

Garner discusses the dangers of flawed forms and word swaps, such as mixing up “lessor” and “lessee.”

Read the article.

When contracting with outsourcing firms, there is often a lot of dissatisfaction with the outcomes, says Kate Vitasek, a consultant and University of Tennessee faculty member. And that is because companies don’t get the contracting part correct.

She is quoted in a report in the Supply Chain Digest.

“Vitasek says she and other researchers at the University of Tennessee have uncovered a better, more user-friendly way of getting to a sound sourcing agreement,” according to the report. “That insight came after studying some of the most successful outsourcing agreements from such companies as Procter & Gamble, Microsoft and McDonald’s, in research funded by the US Air Force that lasted almost a decade.”

The article lists five rules for successful outsourcing contracts.

Read the article.

The Texas Supreme Court has held that the discovery rule delayed the running of the statute of limitations on behalf of the holder of a recorded right of first refusal to purchase mineral interests, reports the Energy & the Law blog of Gray Reed & McGraw.

Gray Reed partner Charles Sartain explains: “The trustees sued the Tregellases for buying the minerals without allowing the Trust to exercise its ROFR, contending that a contract was formed when they sued more than four years after the Tregellases’ purchase; the suit was their acceptance of the right to purchase the minerals, they said.”

The appellate court held that the trust suffered an injury when the minerals were sold, but the discovery rule delayed limitations.

Read the article.

A discussion on the Troutman Sanders website addresses the current state of the law governing a key link to remote contracting — hyperlinks — with the goal of advising how to successfully incorporate by reference separate contract terms using hyperlinks for purposes of contract formation.

“In a series of recent decisions, courts are developing an increasingly consistent view of what is required to successfully incorporate contract terms by reference using hyperlinks,” write Alan Wingfield and Troy Jenkins. “This emerging consensus focuses on four elements: labeling of the hyperlink; the location and prominence of the hyperlink; the accessibility of the information hyperlinked; and the consumer’s assent.”

They discuss those four elements and offer a list of rules to do and another list of methods to avoid.

Read the article.

The first in a series of posts on royalty calculation and payment from Morgan, Lewis & Bockius focuses on issues related to defining the relevant scope of royalty calculations in an agreement.

“While the specific terms governing a royalty will vary based on numerous factors, including the nature of the products and the underlying licensed materials and the contemplated commercialization structure, many concepts are useful across the board.” according to the post’s authors, Mike Pierides and Eric J. Pennesi.

They discuss fixed amounts vs. percentage of revenue, gross vs. net revenue, revenue from initial sales and renewals and add-ons, specific revenue exclusions, and discounts.

Read the article.

General Data Protection Regulation requirements might look like a new bureaucratic threshold for doing business in the European Union. But sooner or later, a strict regulation in this area is likely to occur in every country, points out Vladislav Nekrutenko in an article for IoT Evolution.

The acceptance of the California Consumer Privacy Act 2018 and the Brazil Personal Data Protection Law are good examples in this regard, he explains.

His article details some steps that can help a company fulfill its obligations in contracts with third parties and mitigate risks regarding third parties’ data misuse.

Read the article.

Image by Nick Youngson

Lowndes, Drosdick, Doster, Kantor & Reed takes a look at commercial leases that provide a right of termination to only one of the parties to the lease. such agreements raise the question: “Is this really a contract if one party can walk away at any time?”

The author, James E. Walson, provides a short answer: Unilateral termination rights without any limitation or condition render a contract illusory and make that contract terminable by either party. If, however, the contract places minimal limitations on the unilateral termination, even if not rigorous or burdensome, the contract is not illusory and will be upheld.

“When drafting unilateral termination provisions that require minimal conditions to their being triggered, one should be cognizant that some condition or burden must be placed on the terminating party so as not to void the entire agreement,” Walson writes.

Read the article.

There may be certain circumstances based upon specific policy wording in a commercial general liability insurance policy in which there is coverage for an insured-employer for its vicarious liability arising out of the intentional and excluded conduct of its employees, writes Jeff Collins in an article for Jones, Skelton & Hochuli.

He discusses a case in which the words “the,” “an” and “any” have been assigned significant importance in the case law, and are also at issue in cases examining other liability exclusions.

In the case, a  court held that the phrase “any insured” in an exclusionary clause means something more than the phrase “an insured.”

Read the article.

A long-term care facility can execute contracts with many different vendors including food product and service vendors, laundry and linen providers, IT companies, and others, points out a post from Poyner Spruill.

“Whether working for a single-site operator or a multi-facility system, a thorough review of all contracts and a careful consideration of the ‘what-ifs’ are crucial steps,” write the article’s authors, Christopher S. Dwight and Iain M. Stauffer.

They discuss eight key tips to help with the process, including defining the contract, contract intake, the review process, determining who has authority to sign the contract, the length of the term, termination provisions, dispute resolution and venue, and maintaining the executed copy of the agreement.

Read the article.