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Morgan Stanley’s recent payment of $60M to settle a civil proceeding for failing to properly dispose of customer data is a reminder of the importance of knowing applicable data disposal laws and drafting appropriate data destruction clauses in technology agreements. Sources of Obligations The sources of obligations to destroy or dispose of personal data are myriad. Direct and indirect federal requirements include the Gramm-Leach-Bliley (“GLB”) Interagency Guidelines Establishing Information Security Standards, the GLB Safeguards Rule, the Health Insurance Portability and Accountability Act (“HIPAA”) Privacy Rule, the HIPAA Security Rule, and the Fair and Accurate Credit Transactions…
Recent major cyber attacks have kickstarted a cyber insurance buying frenzy. However, because cyber insurance coverage is unpredictable on many levels, it is critical that technology customers take meaningful steps to address insurance risks and to contract appropriately with their technology vendors. Cyber Insurance Challenges Cyber insurance sounds great on paper but is difficult to implement effectively. Policies notably are not uniform or standard in providing coverage for particular occurrences, parties, or losses. Even within a particular insurance provision, contract language is unpredictable and varies widely across insurers. For example, cyber attacks initiated by state actors may or may
Frequently, software license agreements, cloud agreements, and other technology contracts include restrictive covenants or non-compete clauses that prohibit a customer from using the vendor’s technology to develop competitive or substantially similar products or services. The court in Triage Logic Management and Consulting v. Innovative Triage Services examined the issue and provided a road map for saving such provisions. Hint: Like online terms and conditions, careful contracting is critical. Triage Logic Case In Triage Logic, the software vendor sued the customer for contracting with a third party to develop software similar to the vendor’s licensed product. The vendor-customer agreement prohibited…
For decades, online service providers and web and mobile site owners and operators have sought to bind their users to contractual terms and conditions by way of click-wrap, browse-wrap, and similar methods. For nearly as long, these parties have fought over the enforceability of such online contracting efforts. The path to an enforceable online contract should be clear by now, right? You’d think so. Yet, even today, the formation of these agreements continues to be litigated. Click-Wrap Enforceability: Winners and Losers The keys to binding click-wrap and browse-wrap agreements include notice, clarity, and assent. Generally speaking, a “click-wrap” agreement is…
In technology contracts between customers and vendors, it is common to obligate one or both parties to implement “reasonable security measures” to protect applicable data and information. Typically, the obligation is a function of risk allocation or legal requirements. The recently enacted (and more recently amended) California Consumer Privacy Act’s authorization of a private right of action against businesses that fail to implement reasonable security procedures and practices highlights the issue. But, what are “reasonable security measures?” And, which contracting party decides? The Market Speaks Often, technology contracts merely reference, but do not explain, reasonable security measures. A contract…
Updating in-house contract templates and negotiation playbooks is not sexy, nor is it directly related to a particular revenue-generating transaction. However, it may be an efficient way to address the increased pressure on in-house counsel to close more deals in less time – with fewer in-house resources and with smaller outside counsel budgets – brought on by COVID-19. Your peers are already doing it. Precarious State of In-House Transaction Support Drafting and negotiating contracts is much more challenging since the outbreak of COVID-19. According to a recent Altman Weil survey, 44% of Legal departments plan to cut their 2021…
A recent Third Circuit court case rattled current thinking as to trade secret owners’ authority to enforce rights in their intellectual property. Fortunately, the case provided a path for trade secret owners to fully preserve their enforcement rights when making available their trade secret technology to their customers. In short, the court held that those merely possessing a trade secret may be able to sue for misappropriation – that is, enforcement rights are not exclusive to the owner of the trade secret. Non-Owner Possessors of Trade Secrets May Bring Suit This case (Advanced Fluid Systems v. Huber (3rd Cir. 2020))…
As noted in a recent BBC article, the distributed ledger technology known as blockchain has been hyped for many years as the solution to countless transaction ills. However, to date, its principal purpose has been to support cryptocurrencies. That said, there are valuable, non-cryptocurrency uses for the technology, including to manage supply chains, to track inventory, and to establish and maintain verifiable transaction records. Businesses are increasingly considering and adopting blockchain – thus requiring their legal counsel to prepare to contract for this burgeoning technology. As more fully discussed in a previous blog post, there…
The current COVID-19/coronavirus crisis has forced many companies to buy or sell new technology under a previously unseen sense of urgency. While this speed is critical – and absolutely understandable – take care to ensure that today’s deal structure does not undo tomorrow’s benefit. This is especially true as to non-disclosure and confidentiality issues. If your corporate contracting practice involves establishing a non-disclosure agreement (or confidentiality agreement or NDA) with a potential technology customer or supplier, and then later contracting under a different agreement for the actual business you wish to transact with the other party, now is the time…
The focus of the First Circuit Court’s opinion in Photographic Illustrators v. Orgill (1st Cir. 2020) was whether a sublicense may be granted by implication and whether, under the facts of the case, the sublicensor (Osram Sylvania, Inc.) actually granted an implied license to the sublicensee (Orgill, Inc.). However, the foundation of the case hinged on whether the sublicensable license granted to Sylvania by the principal licensor (Photographic Illustrators (“PIC”)) was subject to a covenant or a condition. In the applicable license agreement, PIC expressly granted Sylvania a sublicensable license to use certain PIC photographs to market Sylvania’s lightbulbs. A…