An employee invention assignment agreement is a crucial tool for protecting intellectual property, but the laws governing them contain traps for the unwary, warns Jeffrey A. Simmons in Foley & Lardner’s Labor & Employment Law Perspectives.

“If the agreement is too narrow or ambiguous, it may allow inventions to slip away. Further, if the agreement fails to include certain provisions, it may be invalid in certain states,” he explains.

Patentable inventions and copyrightable works are the most significant forms of employee-created intellectual property, but the default rules for those creations are polar opposites, Simmons writes.

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Thomas B. Hudson of Hudson Cook writes on the firm’s website that a frequent question he encountered when speaking at industry conferences concerns whether a credit buyer can be required to buy a service contract.

In the context of auto sales, he explains, requiring a service contract in connection with the credit sale of a vehicle does not violate the federal Truth in Lending Act and Regulation Z.

“But the fact that federal disclosure laws don’t prohibit the practice doesn’t mean that the practice is not affected by them. In this case, the key to the application of federal law is the word ‘require.’ When a dealer requires a service contract in financing transactions, but not in similar cash transactions, the charge for the service contract must be treated as a finance charge, added to other finance charges and included in the APR calculation. That’s pretty basic,” Hudson writes.

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Smart contracts can easily comply with offer, acceptance, and consideration requirements of conventional contracts, writes Mykyta Sokolov for lawless.tech.

“Requirements of intent and mutual assent may represent a problem; however, not so complicated smart contracts that are performed as it was intended by the parties can comply with such requirements.” she explains.

In her article, she explains the difference between external and internal smart contracts, especially relating to consideration, mutual assent and intent to be bound, electronic agency as a specific intent issue, and offer and acceptance.

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The Labor & Employment Law Perspectives blog of Foley & Lardner discusses the increased attention paid to restrictive covenants and the increase in litigation as employers seek to protect their confidential information and prevent a loss of business.

Don Schroeder asks and answers the question: What does this mean if you are considering a new hire who is saddled with an employment agreement that contains non-competition and/or non-solicitation provisions?

“As a threshold matter, you should know that regardless of the states where you operate, if you are faced with litigation by the former employer, the judge assigned to the case will look very closely at your new employee’s pre-hire conduct as he/she exited the former employer,” Schroeder explains.

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After 30 years of wrestling with the cumbersome six-part test for determining whether a contract to perform services related to oil and gas exploration on navigable waters is maritime, the 5th Circuit took up a case earlier this year in an effort to streamline the test and bring clarity to an area of the law mired in uncertainty, reports The Energy Law Blog of Liskow & Lewis.

Deciding that several of the factors were either redundant or unnecessary, the court carved away at Davis & Sons until it was left with a two prong test, write John Almy and William W. Pugh.

Those two prongs are:

(1) Is the contract to provide services to facilitate drilling or production of oil and gas on navigable waters? and

(2) Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract?

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A new post on the website of Dickinson Mackaman Tyler & Hagen which discusses what happens if the owners of a business decide to part ways.

A buy-sell agreement addresses voluntary separations – i.e. an owner wants to retire, finds other interests or simply loses the spark with his/her co-owners, explain authors Amy Plummer and Laura Wasson. The agreement also covers involuntary separations – events no one wants to think about, much less plan for – things like bankruptcy, becoming disabled, or passing away.

Their article covers general voluntary buy-sell terms, general involuntary buy-sell terms, tag-along rights, drag-along rights, put  options, and a Texas shoot-out. They also discuss provisions for calculating the valuation of the exiting owner’s interest.

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Attorneys general in 10 states and the District of Columbia have recently launched an investigation into the employment practices of eight fast-food franchises, according to the Fisher & Phillips Non-Compete and Trade Secrets Blog.

Associate Liane Dublinski Kozik writes that the group sent a joint letter to the companies requesting information on the companies’ use of restrictive covenants including “‘employee non-competition,’ ‘no solicitation,’ ‘no poach,’ ‘no hire,’ or ‘no switching’ agreements (collectively referred to as ‘No Poach Agreements’).”

“No-poach agreements should be limited in scope and duration, and if no-hire provisions are included, they should be limited to upper-level management,” she advises. “State-level scrutiny from legislators and attorneys general is not going away and likely to only increase.”

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Image by Yoel Ben-Avraham

The Tech & Sourcing blog of Morgan Lewis takes a look at Software as a Service (SaaS) agreements — starting with the perspective of a solution that uses a dedicated service.

The authors of the article describe this scenario: “The application is provided and hosted as a dedicated instance, with common base software (sometimes with customization or variation) but running as a separate instance in a dedicated environment.”

The discuss:

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A post on the website of Manatt, Phelps & Phillips discusses a case in which an Ohio federal court found that, where a contract required written revocation of consent to be contacted, a consumer’s attempt to orally revoke consent failed.

As part of the cardholder agreement between Carlton Barton and Credit One Bank, Barton provided his explicit consent to be contacted on his cellphone number in any way (such as prerecorded message, autodialer or text message), explain Diana L. Eisner and Christine M. Reilly. Barton later claimed that he revoked his consent by telling a representative of Credit One not to call him anymore.

Barton sued under the Telephone Consumer Protection Act, but the court found that the plaintiff provided his cellphone number to the defendant when he filled out his application form and “‘a party who gives an invitation or permission to be called at [a certain] number’ has given ‘prior express consent’ to be contacted.”

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One area of an employee agreement that can be over-looked, or perhaps misunderstood, is intellectual property, according to a post by John E. Munro on the website of Harness, Dickey & Pierce. Intellectual property, however, can be one of the most valuable assets of a company and should not be glossed over.

In the post, Munro discusses three provisions of an employee agreement that may be missing or could use a tune-up.

These are: the present invention assignment clause, the invention assignment carve-out, and a whistleblower provision.

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The 5th U.S. Circuit Court of Appeals has reversed a Texas federal court’s order compelling arbitration in a sexual harassment and discrimination case because one party failed to sign an agreement to arbitrate, reports Karl Bayer in the Disputing blog.

Writing for the blog, Beth Graham describes the case in which the plaintiff, Huckaba, signed an arbitration agreement that waived her right to sue Ref-Chem L.P. prior to beginning employment with the company.

“The agreement included a signature box for Ref-Chem and also required that the company reciprocate by giving up its right to sue Huckaba. After the woman signed the contract, however, Ref-Chem failed to have an officer of the company countersign the document.”

When Huckaba later filed a sexual harassment, discrimination, and retaliation lawsuit against Ref-Chem, the company responded by filing a motion to compel arbitration. The district court granted Ref-Chem’s motion.

The 5th Circuit concluded “there is not a valid agreement to arbitrate in this case,” reversed the district court’s order compelling the dispute to arbitration, and remanded the lawsuit back to the district court, Graham writes.

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One area where the distinction between written versus unwritten agreements makes a difference is in the calculation of the statute of limitations, points out Christopher G. Hill in his Construction Law Musings blog.

Virginia’s 5- year statute of limitations for written contracts — compared to the 3-year statute unwritten contracts — came into play in  M&C Hauling & Constr. Inc. v. Wilbur Hale in the Fairfax, Virginia Circuit Court.

M&C provided hauling services to the defendant through a subcontract with Hauling Unlimited. No separate written contract between M&C and Hauling Unlimited or Hale existed. Hauling Unlimited filed a plea in bar to have the matter dismissed as being brought beyond the 3-year statute and argued that no signed or other written contract existed.

“The Court determined that Hauling Unlimited and Mr. Hale assented to M&C’s terms and did not insist on a signature to make their contract a written one,” writes Hill.

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A recent Armed Services Board of Contract Appeals decision confirmed that waiver defenses can defeat government demands for strict compliance with contract requirements, reports Cohen Seglias Pallas Greenhall & Furman.

Authors Maria L. Panichelli and Alissandra D. Young explain that the Board found in Appeal of American West Construction, LLC that the U.S. Army Corps of Engineers had effectively waived the right to enforce a construction contract specification.

“This meant that the government could not recover from the contractor the difference in the price it paid for the original specification and the lower amount spent by the contractor to perform the deviation,” they write. “In a world where the government often has the right to strictly enforce contract requirements and hold contractors financially responsible for any deviation, this decision is a big win for construction contractors.”

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One of the key insurance policy provisions that is often included in commercial contracts to transfer risk is the requirement that one contracting party make the other contracting party an additional insured on their insurance policy, according a website post for SandRun Risk.

The authors discuss the 2013 Insurance Services Office revisions to the standard additional insured endorsement form.

The three significant changes are:

• Insurance provided to an additional insured will apply only to the extent permitted by law
• If additional insured coverage is required in a contract or agreement, the additional insured will not be provided coverage that is any broader than required in that contract or agreement with the named insured
• The limits available to an additional insured will be the lesser of the limits required by contract or available under the policy

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Employers who use non-compete agreements take note: Minnesota courts want to see more than just words in a contract before they will grant injunctive relief against a former employee, warns a post on the website of Dorsey & Whitney LLP.

The article discusses St. Jude Medical, Inc. v. Carter, which arose after Heath Carter left his employer to work for a competitor. The employer filed suit against Carter and the competitor, alleging violations of Carter’s non-compete agreement. The employer sought an order enforcing the terms of the non-compete agreement and prohibiting Carter from working for a competitor in his then-current position. Although the jury found that Carter had breached his non-compete agreement, the court refused to enter an injunction, finding that the employer failed to establish that it had been harmed.

The Minnesota Court noted that “[a] private agreement is just that: private,” and concluded that such contractual language does not, by itself, entitle an employer to an injunction after proving the breach of a non-compete.

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A lack of precision in responding to an offer can lead to confusion as to whether or not a contract has been formed, warns an article published by Burns & Levinson on JDSupra.com.

The article discusses  APB Realty, Inc. v. Geogia-Pacific LLC, a case involving a contract negotiation for the purchase of 88 rail cars. During the negotiation, Georgia-Pacific offered two options to APB, the buyer. After APB said it was leaning toward one of the options, Georgia-Pacific’s broker told APB that his client had accepted a higher offer.

APB sued for breach of contract.

The article says that “the First Circuit held that because APB might be able to prove that a contract between it and Georgia-Pacific was formed, it would be improper to throw out the lawsuit on a motion to dismiss. Thus, while APB is a long way from winning its suit, at least it is in the fight.”

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A podcast posted by Pepper Hamilton discusses the definition of fixed-price contracts and cases in which the audit provision in the contract has been unsuccessfully used to assert claims for reimbursement and False Claims Act liability.

“Fixed-price contracts are well-known among contractors,” the firm says on its website. “These agreements seem simple — they do not allow the contract price to be modified after the award unless the parties expressly agree. But is it really that simple? In reality, there is very little case law guiding the practical approach to these types of contracts.”

In the podcast, Marion Hack, a partner in Pepper’s Construction Practice Group, discusses these types of contracts.

Listen to the podcast.

Because law firms are such desirable targets for hackers, firms have had to find solutions for keeping the intruders at bay. They can use internal systems managed by employees of the firm, or they can go to a cloud-based solution, such as software-as-a-service (SaaS).

Writing for Above the Law, Scheef & Stone partner Tom Kulik points out that SaaS platforms can help offset the cost by offloading technical and security expertise to the SaaS provider. But the standard contract terms offered by these providers do not weigh in favor of the law firm.

In the article, Kulik discusses some points to consider when a firm is considering entering into a contract for SaaS.

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More and more cases are being submitted to arbitration as a result of pre-dispute contractual clauses, point out John P. DiBlasi and Jacqueline I. Silvey in an article for National Arbitration and Mediation.

“In other words, at the time of entering into the contract, it is wise to make sure the contract contains a clause that provides for arbitration in the event of a future dispute,” they write. “These clauses are found in all types of agreements and in a myriad of contract forms involving construction, consumer financing, employment, insurance, rendering of professional services, sale of goods, and others.”

The article covers the basics of the arbitration clause and the administration of the process in a dispute.

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On construction projects, owners and developers often are familiar with standard contract language and provisions, but the industry is continually evolving, according to a paper published by Zetlin & De Chiara LLP.

The paper discusses 10 key contract provisions and tips to help parties avoid pitfalls.

Those areas include scope of work, compliance with schedule, meeting the owner’s target for the budget, contingency, changes in the work, indemnification, insurance, dispute resolution, general conditions, and subcontract issues.

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