Licensing and Development Agreements Crafting Provisions to Allocate Risk, Avoid Common Pitfalls, and Minimize Liability

Transcription

1 Presenting a live 90 minute webinar with interactive Q&A Structuring Software and Technology Licensing and Development Agreements Crafting Provisions to Allocate Risk, Avoid Common Pitfalls, and Minimize Liability TUESDAY, OCTOBER 4, pm Eastern 12pm Central 11am Mountain 10am Pacific Td Today s faculty features: Paul H. Arne, Partner, Morris Manning & Martin, Atlanta Paul C. Jorgensen, Principal, Jorgensen Law Firm, Washington, D.C. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions ed to registrants for additional information. If you have any questions, please contact Customer Service at ext. 10.

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5 Structuring Software and Technology Licensing and Development Agreements Crafting Provisions to Allocate Risk, Avoid Common Pitfalls, and Minimize Liability Paul C. Jorgensen

6 Segment Goals Most important Draft better provisions of tech provisions license and development agreements 6

7 Why License/Develop Tech? No capacity for Can avoid runaway manufacture, licensee development, distribution Innovation control Self-invest < License or Settle dispute develop Competition control Licensee better capacity Independent income and expertise Keep IP Commercialize/expand Access without costs 7

8 Why Seek License/Develop? Access to IP IP ready for commercialization No R&D resources Have market access and expertise Market ready for IP Independent expansion and improvement plan 8

9 Preparation Understand the relationship Understand the IP Know your audience Understand the goals Know the key provisions 9

10 Term Position upfront Consider IP and expectations Precise Effective Date and end dates Avoid Auto-renewals Termination details 10

11 Licensor s Obligations Clearly Identify IP Use Attachment Account for IP complexity Account for technology changes If in development, attach development agreement or SOW 11

12 Licensor s Obligations What can be done with Character of grant IP? Grant appropriate and sufficient i rights Use unambiguous verbs Where activity can be done? Territory Field Specific location or purpose Exclusive/non-exclusive Assignable/non- assignable Most Favorite 12

13 Licensor s Obligations Contact Technical assistance IP Maintenance 13

14 Licensee s Obligations Services/Deliverables Separate SOW Payments Type Lump Sum Up front or milestones Royalties - Tied to gross/net sale Various methods Useful as incentive Make calculation clear Frequency up front, calendar, acceptance 14

15 Licensee s Obligations Quality Standards Varies with IP Attachment if potential to change Objective and measurable Inspection/review Reporting Frequency Type Audits 15

16 Confidentiality Everything CONFIDENTIAL List exceptions Proscribe receiver s use Require security level Include liability for disclosure Return/destroy Specify termination survival 16

17 Warranties Create reliance and risk Full disclaimer or as is Reasonable warranties Industry consistent Client s degree of control over IP/goods/services Safe duration 17

18 Warranties Do facts allow? Commercially reasonable timely delivery IP ownership Capacity to grant IP valid/no infringe i Fitness for intended purpose No workmanship defects Accuracy Reliability No law or 3P right violation Functionality Compatibility Authority 18

19 IP Ownership and Maintenance Not transferring Who owns IP What each brings Who owns independently-developed IP Who owns jointly-developed IP Broad definition Post-termination license Anticipate unknown technologies Stress confidentiality Who must maintain/protect 19

20 Indemnification/Limitation of Liability Indemnification Limitation of Liability Core Unrelated to Agreement Arising from misreps or breaches Specific L/r: Related to IP L/e: Related to development, manufacture, etc. Special product liability Carve out willful or negligent Survive termination Set reasonable limit Waive consequential, punitive, etc. State limits N/A to indemnification Exceptions for breach of confidentiality or gross negligence 20

21 Termination Unilateral terminations with notice or none allowed Eventualities making continuing impossible or repeated failures Deal killers 21

22 Post-Termination Obligations stopping and continuing Return of work completed and in process Dispensation of source code Reporting on progress financial status Confidentiality Transition assistance 22

23 Miscellaneous Force Majeure obligation to resume Choice of Law reflect Territory IP, tax, security and competition laws 23

24 Structuring Software and Technology Licensing and Development Agreements Crafting Provisions to Allocate Risk, Avoid Common Pitfalls, and Minimize Liability Paul C. Jorgensen

25 Structuring License and Development tagreements Paul H. Arne Morris, Manning & Martin, L.L.P Peachtree Rd Atlanta Financial Center Atlanta, GA

26 Agenda Drafting Agile development agreements Open source issues

27 Traditional Development Model, Waterfall Determine scope Develop Change Control Test (sometimes interim i deliverables) Accept (sometime interim acceptance)

28 Software development success rates Standish group CHAOS report: (2004) 34% success rate 51% challenged, i.e., over time, over budget or missing functionality 15% abject failures

29 Since Then Success rates have improved Why?

30 Iterative Development Agile Lightweight Scrum Crystal Clear Extreme Programming Adaptive Software Development Feature Driven Development Dynamic Systems Development Method

31 Other Major Development: Software as a service

32 Agile Principles Welcome changing requirements, even late in development. Deliver working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale.

33 Agile Principles Business people and developers must work together daily throughout the project. The best architectures, requirements, and designs emerge from self-organizing teams.

34 Agile Principles At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly.

35 How Should Development Contracts Adjust? Consider and document actual development methods Rights taking on added significance Governance Personnel quality Services quality Termination for convenience

36 How Should Development Contracts Adjust? Recognize and draft different testing at different times Unit Usability Regression Integration ti System System Integration Stability Load Security

37 Open Source Software, Scope Copyleft Agenda Sweat the small stuff Affero Interface with license/development

38 Open Source Scope It s plural (x2) It s ubiquitous

39 Copyleft If you use open source and combine & distribute it with other programming, you must also offer the source code of the entire work, for a nominal charge, and not restrict further modification or distribution

40 Sweat the Small Stuff Jacobsen v. Katzer, 535 F.3d 1373 (2008)

41 Background Jacobsen open source software (JMRI) Katzer/Kamind Assoc. proprietary software

42 Alleged Infringements Authors names Copyright notices Reference to license text Identification of JMRI or SourceForge as the source of the code Description of how files had been changed

43 DMCA No person shall circumvent a technological measure that effectively controls access to a work protected under this title.

44 Rise of GNU Affero GPL [I]f you modify the Program, your modified version must prominently offer all users interacting with it remotely through a computer network an opportunity to receive the Corresponding Source.

45 Open Source in License and Development Agreements What open source licenses involved? Internal use only? Distribution? Offer on SaaS basis?

46 About Paul Arne Paul Arne is the senior partner in the Technology Transactions practice in the Atlanta office of Morris, Manning & Martin. Paul founded and chairs the firm s Open Source Practice Group. He is a frequent speaker and writer on open source topics, including articles in The Computer & Internet Lawyer and the Journal of Internet Law. `

47 Structuring License and Development tagreements Paul H. Arne Morris, Manning & Martin, L.L.P Peachtree Rd Atlanta Financial Center Atlanta, GA