Technology Transactions counsel should read these provisions carefully and confirm they are appropriate for customer’s intended use. If properly drafted by the vendor’s counsel, these provisions should not require much negotia- tion for off-the-shelf or otherwise preexisting software.
Technology Transactions. Practice Tip for Customers
Technology Transactions. Practice Tip for Vendors
Technology Transactions is being used in accordance with the terms of the agreement; and
Technology Transactions. 1:6.10 Disclaimers [A] Generally [B] Title and Noninfringement § 1:6.11 Xxxxxxxx-Xxxx Warranty Act § 1:7 Implementation and Acceptance § 1:8 Indemnification for Infringement or Misappropriation of Intellectual Property § 1:8.1 Scope § 1:8.2 Exclusions/Limitations
Technology Transactions a person that becomes a licensee of a general intangible in good faith, without knowledge that the license violates the rights of another person in the general intangible, and in the ordinary course from a person in the business of licensing general intangi- bles of that kind. A person becomes a licensee in the ordinary course if the license to the person comports with the usual or customary practices in the kind of business in which the licensor is engaged or with the licensor’s own usual or customary practices.
Technology Transactions respective rights to terminate the software license agreement. In particular, parties should avoid unexamined use of boilerplate termi- nation provisions. For example, it is likely not appropriate for a customer’s insolvency or bankruptcy to be a cause for termination. As long as the customer has paid and is continuing to pay for its license, its rights probably should continue. Similarly, in most cases a customer should not have the right to terminate a software license merely because the vendor is experiencing financial issues. If the customer has paid most or all of its fees up front, or if the software is mission-critical, the prudent customer will often seek to limit the vendor’s termination right—even for cause. In such a case, the customer may seek to limit vendor ’s right to terminate to circumstances where customer has failed to pay undisputed amounts for a significant period of time and after written notice. The vendor would, however, still have the right to contract damages for any customer breach of the agreement. In some circumstances, this may prove insufficient, and the vendor will insist on an additional right to terminate if customer is misusing the vendor’s IP or taking other continuing actions that have the potential to cause vendor harm. The parties should also include appropriate provisions describing the effects of any termination, such as return or destruction of the software and the return of customer’s data.
Technology Transactions. [C] Unenforceability of Anti-Assignment Language In furtherance of the policy in favor of maximizing the value of the debtors assets, section 365(f) of the Bankruptcy Code renders unen- forceable anti-assignment language in an executory contract. [D] Avoidance of Transfers If a party enters bankruptcy, certain licenses or other transfers might be set aside under section 547, as a preferential transfer, or under section 548, as a fraudulent transfer. The prudent customer should consult bankruptcy counsel early in the process if licensing critical software from a financially distressed vendor.
Technology Transactions there is a dollar cap, however, it is the author’s view that excluding consequential damages is often not appropriate.38
Technology Transactions to “hold harmless” is somehow broader than the obligation to indemnify—perhaps by also including an obligation to protect or defend against the risk of loss and not just the actual loss. Note also that still others believe an obligation to “hold harmless” means the obligor is not permitted to seek damages from the other party for the actions of that other party.17 The author agrees with the majority view that “indemnify” and “hold harmless” should be considered synonyms, and that “hold harmless” should therefore be avoided. To keep them both “just to be safe” is actually quite the opposite since, as the well-regarded legal lexicographer Xxxxx Xxxxxx puts it: There has been a xxxxxx of needless litigation over the doublet, as litigants have wasted countless dollars fighting over imaginary differences between the words—differences that have no historical justification. . . . There’s an object lesson for all of us . . . make considered drafting decisions that avoid extra words that don’t convey extra meaning—because some court, somewhere, some day will find extra meaning where there isn’t any.18 The problem, of course, arises from the rule of contract interpre- tation about reading nothing in a contract as “mere surplusage” and giving effect to every word. However, in Xxxxxx’x words: That’s not a bad rule when legal drafters abstain from larding their contracts with surplusage, but it’s a horrible rule when they do.19
