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PROTECTING AGAINSTTHE UNKNOWN:How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
Samuel FrederickAttorneyP: 517.371.8103E: [email protected]
Nicholas OertelAttorneyP: 517.371.8139E: [email protected]
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
IT CONTRACT REVIEW
Three Types of Software
Off-the-Shelf Software
Customized Software
Custom Software
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
Scope of License
Use Rights The scope of the license defines the specific
USE rights which software licensee acquires under the license agreement.
Authorized Users A software license must identify precisely who
is authorized to use the software.
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
Scope of License
Permitted and Prohibited Uses A User may be limited to using the software
for its own internal use or only in its primary business activity.
If a license is limited in scope and the licensee acts outside the scope, the licensor can bring an action for copyright infringement.
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
Scope of License
Exclusive vs Non-Exclusive Non-Exclusive License permits the user to use
the software, but also allows the vendor to license the same software to other users.
Exclusive License the user can use the licensed software, but the vendor is not permitted to license the same software to any other users.
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
Scope of License
Software Disabling Devices Bombs and Bugs
Software Audits In many instances unlicensed software may
become part of an organization if there is not a policy preventing employees loading personal copies or sharing software applications
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
Scope of License
Limitation of Liability Watch out and preserve your rights! The law allows the parties agreeing to limit
their damages
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
Ownership of Software
Physical Copies Who owns the rights in the software at your
organization? US Copyright Act
• ownership of a physical copy of a work does not grant any ownership rights in any intellectual property embodied in the copy
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
Ownership of Software
Sublicensing A right to sublicense allows the licensee to
grant certain rights to third parties Modification
Each party User and Vendor believe they each own the rights – be clear in contract about subsequent ownership rights.
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
Open Source Software
What is it? Source code made available by owner to the
public under a “public license” so that the source code can be read, modified and redistributed by users, subject to certain conditions
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
Term of License
Time Period
Renewal
Bankruptcy of Licensor
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
Maintenance and Updates
Updates Without proper updates the software can
become obsolete Service Credits (if not performing)
Negotiate performance/service credits Term
90 days and 1 year Availability
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
Fee Structure
Breakdown of Costs Terms regarding license fee should be specific
and complete. Refund Service Credits Partial Payments
• When milestones are met
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
Source Code
Need For Source Code
Vendor Concern
Escrow
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
Assignment of Rights
Financial Interests Vendor Assignments
Users are reluctant to permit the vendor to assign the contract
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
Modifications
Necessity And source of revenue (vendor)….and
expenses (user) Issues
Modifications should be highly defined and specified; performance; timelines ect.
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
Quality
Representations and Warranties Ownership of IP Performance
• Response Time Warranties• Capacity or Throughput Warranties• Reliability of Warranties
Disclaiming Warranties and Limitations of Liability
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
Trade Secret Protection
Confidentiality provisions are a MUST.
Vendor Rights
Termination
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
Multimedia Licensing
Acquisition of Rights
Future Technologies
Protecting Against the Unknown: How to Successfully Review IT Contracts to Increase Your Rights and Avoid Potential Liability
April 18, 2023
TOP TIPS IN NEGOTIATING IT CONTRACT
Essential Tips for Each Contract!
Always remember – its always negotiable.
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QUESTIONS?
Samuel FrederickAttorneyP: 517.371.8103E: [email protected]
Nicholas OertelAttorneyP: 517.371.8139E: [email protected]
