• Wednesday, March 30th, 2011
The Supreme Court will hear oral arguments in Microsoft Corp. v. i4i Limited Partnership on April 18th. Why is this important? This case is likely to provide the Supreme Court another opportunity to strike down another bright line rule. Since 1983, the courts have followed a bright line rule in order to invalidate a patent in Court: There is a statutory presumption that a patent is valid. A litigant must provide clear and convincing evidence that a patent is invalid. That’s an extremely high burden to overcome. It is expected that the Court could adopt a flexible standard for this presumption. Many experts believe the Supreme Court will provide a bifurcated process. If a patent is attacked on the basis of evidence that previously had been considered by the Patent and Trademark Office, the courts would defer to the PTO’s expertise and uphold the patent unless there was clear and convincing evidence of invalidity. If, on the other hand, a patent was attacked on the basis of new evidence, not previously considered by the PTO, the courts would allow the patent to be found invalid on a mere preponderance of evidence.
This is important for two reasons: (i) when filing a patent, one will need to ensure it does a thorough review of prior art and that it provides such art to the United States Patent & Trademark Office; and (ii) proving invalidity in Court will become easier.
As I think about this issue, I wonder if it will make defending against patent trolls much easier. It will clearly be easier to invalidate a patent, but getting to that point in a lawsuit is often expensive. There may be an even more compelling threat however. I would think proving a frivolous case against a patent troll will become a bit easier where the troll does not conduct a thorough investigation and ignore compelling prior art. We have all seen these folks press forward despite both issues in the hopes of extorting a company. Will this decision help prevent suits and create opportunities for earlier dismissal and/or settlement? Only time will tell.
• Wednesday, March 16th, 2011
Last post, I discussed how to identify whether your contracts lifecycle management system needs optimization. I also provided a high level roadmap for attacking the issues, but did not discuss the items needed to be confronted. In this post, I want to explore some basic issues that will need to be addressed to optimize your contracts management process. While the list below is somewhat high level, it is equally applicable to most companies. The actual steps to address each issue will be dramatically different depending upon a myriad of issues, including financial resources, personnel, size of company, risk profile, geographies served, etc.
- Development of form templates that are specifically tailored to your Company and its risk profile.
- Process for requesting, obtaining and tracking the drafting of a contract.
- Development of an appropriate retrieval system for each form templates
- Process for routing the contract to a contracting party and a tracking mechanism for the status of its negotiations.
- Negotiation process and approvals, including:
- Determine the negotiation process.
- Will you make changes inside your template or require separate amendments?
- Will you use an approved alternative clause database?
- Develop a contracting Manual (e.g., policies and procedures surrounding your contracting process; annotated version of a particular contract, including purpose of specific clauses, typical negotiation points from the other side and appropriate negotiation techniques against such negotiation points.)
- Extensive training to empower personnel.
6. Process to ensure that your form templates and alternative clauses are modified based upon actual negotiations that occur.
- Signature process, including delegation of authority process.
7. Storage and retrieval system
- Physical and electronic
- Repository of key terms, conditions and obligations for all contracts.
8. Alarms and ticklers based upon contractual commitments / obligations.
• Monday, March 14th, 2011
Here are a few questions you should be asking about your contracts management process:
- Does your Company have an efficient process for its employees to obtain a contract for his/her needs?
- Does your Company use an efficient contracts approval process; while leveraging an approved alternative clause process?
- Can you quickly and efficiently locate and report upon key terms within ALL of your company’s contracts?
- Can you ensure that the Company will not miss contractual commitment or milestone?
If you answer no to any of the above questions, your Contracts lifecycle management (CLM) process may need some improvements. An efficient CLM process maximizes financial and operational performance while minimizing cost and risk. The CLM process includes processes and systems for: requesting, creating, negotiating, executing, storing, monitoring and reporting upon all of a Company’s contracts. Each CLM project must be specifically tailored to your particular company. This will require a cross functional team from your Company. It will also require an independent voice that has a diverse understanding of legal and business issues that surround the contracts management process. The types of contracts managed through this process include all third-party contracts, such as NDA’s, purchase agreements, outsourcing agreements, sales agreements, lease agreements and licensing agreements.
What Are the Steps to Get Started?
1. Get senior management sponsorship for your CLM project.
2. Assemble an experienced cross functional team.
3. Have an independent person moderate and drive the project.
4. Evaluate your ‘as is’ contract management process and decide if you want to stick with it or redesign your processes and follow best practices.
5. Determine the top priorities for your company:
6. Scope the project
7. Deploy the solutions.
Please come back in a few days to read my “How To” for optimizing your contracts management process.
• Monday, March 14th, 2011
Please see the positive article written about Outsourced General Counsel, LLC. The article has run in the Sudbury Town Crier, Metrowest Daily News and now the Milford Daily News.
• Tuesday, March 08th, 2011
Do you know what open source software is embedded into your products? Do you, as most companies, seek an exit strategy? If you do seek an exit strategy at some point, you must answer yes to the first question. Please click on this article to read a nice write-up discussing the issue of open source and M&A.
The present reality is that companies must add an understanding of open source into its compliance efforts.