The Contract Is Unenforceable a. No consideration
b. Oral agreements
c. Ambiguity, omission or invalidity
d. Limitations on enforcement
e. Bankruptcy of party
Exposure to Third-Party Liability a. Vicarious (employer/ employee and principal/agent)
b. Indemnification and hold harmless clause
c. Statutory—e.g., contributory infringement
Unequal Bargaining Positions (Contracts of Adhesion)
III. NONDISCLOSURE AGREEMENT
Purpose—NDA enables disclosure of commercially valuable secret information for evaluation by recipient with whom a relationship involving the information has not been formed under protection against use or disclosure by the recipient
Key Provisions a. Definition of secret information to be disclosed
b. Establish permitted use (e.g., no reverse engineering
c. Establish safeguards for maintaining secrecy
d. Provide for return of information
Potential Disaster Areas a. Not in writing
b. Inadequate definition of protected information (secrets vs. trade secrets)
c. Inadequate duration of protection
d. Lack of secrecy safeguards
e. Ineffective enforcement remedies
IV. EMPLOYMENT AGREEMENT
Purpose—Employment Agreement defines the respective rights and obligations of the employer and employee to avoid later dispute over such matters as compensation, termination, and rights to IP
Key Provisions a. Employment at will
b. Payment terms
c. Confidentiality of employer’s trade secrets
d. Disclosure and ownership of IP created by employee
(1) work for hire copyright
(2) patent shop rights
e. Noncompete
f. Representations and warranties of employee
g. Indemnification
h. Arbitrate or litigate
Potential Disaster Areas a. Not in writing
b. Implied employment term
(1) course of dealing
(2) employee policy manual
c. No assignment of IP rights
d. No representations and warranties
e. No indemnity
f. Unclear scope of employment
g. No at-will employment clause
h. No power of attorney to secure IP registration
V. SOFTWARE DEVELOPMENT AGREEMENT
Purpose—Provide for the functionality (deliverables) and schedule (milestones) of programming to be performed by developer, transfer IP from developer to purchaser, and compensation to developer
Key Provisions a. Description of software deliverables and milestones
b. Acceptance standards
c. Payment terms (commission/ royalty)
d. Representations, warranties and limitation of liability
e. Transfer of IP rights (license or assignment) to patents,
copyrights, trademarks or trade secrets
f. Confidentiality
Potential Disaster Areas a. Not in writing (work-for-hire rule)
b. Unanticipated delay
c. Defining and correcting bugs
d. Developer goes out of business
e. Developer use of undisclosed software
f. Developer infringement – purchaser liability
VI. SOFTWARE LICENSE AGREEMENT
Purpose—Transfer specified rights in existing software from owner to licensee for a defined term, provide for support services and warranties, if any, and specify owner’s compensation
Key Provisions a. Scope of license—use, duration, transferability, exclusivity, territory
b. Scope of Services
(1) training
(2) conversion of data
c. Payment terms
d. Warranties and limitation of liability
e. Software escrow agreement
Potential Disaster Areas a. Not in writing
b. Customization and conversion of data
c. Ownership of licensee- created IP based on software
d. Monitoring use
e. Theft by former employee
f. Licensor goes out of business
g. Licensor infringement – licensee liability
VII. WEBSITE DESIGN/HOSTING AGREEMENT
Purpose—Designer agrees to perform specified services to design, develop artwork and graphics, recommend and/or create software, and provide features for client’s website in exchange for defined compensation. Designer also may provide facilities to host website for client.
Key Provisions a. Specification of design services
b. Description of deliverables and milestones
c. Ownership of IP
(1) work for hire
(2) site (domain name)
(3) graphics and programming
(4) licenses to imbedded software of third parties
d. Payment terms
e. Confidentiality
f. Warranties and limitation of liability
Potential Disaster Areas a. Not in writing (work-for-hire rule)
b. Designer retention of IP ownership rights
c. Unanticipated delay
d. Defining and correcting bugs
e. Interruption of hosting service
f. Control of website changes
g. Designer/host goes out of business
h. Designer infringement – client liability
VIII. REMEDIES
Mediate, Arbitrate or Sue
Damages a. Compensatory
(1) lost profit
(2) illegal gain
(3) fair value
b. Statutory
c. Liquidated
d. Punitive
