TECHNOLOGY TRANSACTIONS. Practice Tip for Customers Seek to have the negotiated exceptions to the dollar cap apply also to any exclusion of consequential or other types of damages.
TECHNOLOGY TRANSACTIONS. Practice Tip for Vendors Since the transfer of nonexclusive license rights can sometimes lead to significant unintended consequences (such as transfer to a competitor), consider a broad “deemed transfer” clause that would require your permission prior to any transfer by change of control of the customer by stock sale, merger, or the like.
TECHNOLOGY TRANSACTIONS. Practice Tip for Vendors Be careful using “consent not to be unreasonably withheld” in your standard assignment clause. Some courts have held this to change the default common law rule of no assignment by the licensee, and therefore give the trustee or debtor-in-possession the right to assign. [B] Potential Consequences for the Customer The statutory language and case law regarding section 365(c), however, can go even further and lead to what some might consider a perverse result for the customer. Depending on whether the applica- ble court follows the “actual” or “hypothetical” test for evaluating the right to assume a nonexclusive license, a debtor-in-possession cus- tomer may be blocked, not only from assigning to a third party, but also from assuming and continuing its own operations under its nonexclusive licenses. This problem follows generally from the theory that the debtor-in-possession is considered to be a separate legal entity from the pre-petition debtor.
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 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 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. 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 is being used in accordance with the terms of the agreement; and
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. Practice Tip for Customers The prudent customer should consult bankruptcy counsel early in the process if licensing critical software from a financially distressed vendor.
TECHNOLOGY TRANSACTIONS. Deliverable to the applicable requirements. If Vendor concludes that such conformance is impracticable, then Vendor shall refund the fees paid by Customer to Vendor hereunder [allocable to the nonconform- ing Deliverable], provided that Customer first returns to Vendor all copies of such Deliverable. Practitioners should note the distinction between a substantial conformance standard in the context of an acceptance provision and in the context of a performance warranty. There is good reason to consider these contexts separately and perhaps require strict confor- xxxxx of developed software at the acceptance stage. From a custo- mer’s perspective, it would seem odd to require acceptance of nonconforming developed software based on a claim that the non- conformance is not substantial.
