Tag Archives: agreement

Intellectual Property

Understanding Licensing Agreements: From the IP Owner’s Perspective

Understanding what constitutes “intellectual property” (IP) and the importance of protecting it is important to any business owner. IP is anything that is created in an individual’s mind, including art, music, computer software, inventions, designs and trademarks. You can protect IP with a license, which is a type of contract that allows you to maintain control over your IP but transfers certain rights to a third party to use the IP.

The holder of the IP rights is called the “licensor.” The party that wishes to use the IP is called the “licensee.” By entering into a license agreement, the licensee pays money to the licensor for the right to use the invention or creative work. In many software license situations, the licensee is granted a non-exclusive right to use the IP. In other situations where the licensee has been involved in some development of the IP, the licensee may expect either ownership rights or exclusive rights to use the IP.

The primary way to protect your IP is to register for all rights that apply to your circumstance, such as:

  • Patents – inventions
  • Copyrights – original works of authorship
  • Trademarks – symbols, words, names or other designations used to identify goods made or sold in order to distinguish them from other similar goods

Intellectual property law can be complex, so it is important to confer with a knowledgeable attorney on how to protect and manage your IP rights. Once you have secured your rights to the IP, you can create your licensing contract.

A license agreement does not have to be lengthy and complicated, but it must be uniquely tailored to meet your individual needs. You want to ensure the contract is clear and concise, but most importantly, enforceable. Federal law imposes strict civil and criminal penalties for unauthorized use of IP. Your license agreement should provide you with the ability to file a lawsuit to enforce your rights and recover certain remedies such as an injunction and monetary damages if the licensee misuses the IP. You may also be entitled to recover actual damages, which may include any money you lost as a result of the infringement. In certain cases, you may even be able to recover any profits wrongfully gained by the infringing party.

To learn more about license agreements or how we can assist you with other business-related matters, contact Leslie S. Marell today. For more information, please read our next blog titled “What to Include in a Licensing Agreement.”

Business, Contracts

How to Expedite the Legal Review

When you are negotiating a contract with another party, it can be a complex and lengthy process. Below are a few tips to help expedite the legal review process before you even involve your attorney:

  • Before you give the other side a copy of the contract, talk over the major issues. Create a checklist of issues to discuss so you can determine where the starting point is for both sides before the negotiations even begin.
  • Once you discover the issues where the parties disagree, try to negotiate and reach an agreement on as many of them as possible. The more you can work through before the attorneys get involved, the better off you are likely to be. Even a “legal” clause such as the warranty provision should be discussed. Talk through what the warranty includes, how long it will last, and the deadline for fixing the problem.
  • Wherever possible, you’ll want to start working with a standard template; However you can’t rely on a standard template and simply fill in the blanks. Remember, this is a unique transaction that should include the deal points you have agreed upon. You will have to make revisions to any template to conform to the deal.
  • If the other party is making significant changes to the contract, don’t be afraid to ask questions about why they are being made. Asking these questions will provide you with information about the other side’s concerns, which is critical in reaching an agreement.
  • Discuss the business aspects of all clauses, even the “legal” or standard clauses. For example, if the supplier insists on inserting a limitation of liability, ask what the supplier expects it should be responsible for if their product is defective and it’s in the field.
  • Get creative in finding solutions to avoid problems, or minimize their impact. For example, in the purchase of capital equipment, you might discuss some form of limitation of liability in exchange for the supplier providing no charge monthly preventative maintenance and on site spare part consignment. Talk in real world terms with real world approaches to heading off the problem of faster resolutions.

Most importantly, don’t simply “hand off” the contract to your attorney. Schedule a meeting with your lawyer to discuss what has been negotiated between the parties and the reasons for the other party’s exceptions. You should stay engaged in the process and encourage your counterpart to do the same.

If you follow the above tips, it will reduce the time involved in the legal review process and help ensure you achieve a positive result. When you are ready to involve an attorney, contact Leslie S. Marell.

Contracts

Why your Contract Should Contain a “Defense Clause”

A “defense clause” is a provision that establishes the duty to defend the other party to a contract in certain circumstances, such as preparing for and defending a lawsuit. It is commonly found in an agreement in conjunction with indemnification clauses and hold harmless provisions.

The party that has undertaken the obligation to defend is given control over the defense. In contrast to indemnification, the duty to defend is usually triggered when there is a claim, not after a judgment has been rendered or loss has been established. Thus, indemnification and the duty to defend are two separate provisions creating distinct rights and obligations.

Agreeing to the duty to defend is a significant undertaking. There is a significant amount of time, money and effort that must go into preparing for and defending litigation. The defending party can hire its own lawyer to handle the trial for the party being defended, which can be a downside to agreeing to a defense clause. The specifics governing how counsel will be selected and who has authority to settle the claim should also be detailed in the defense clause.

Some parties, especially those that are self-insured, prefer to retain control over their own defense. As such, they try to negotiate a defense clause out of the contract. If you want to retain control over your own defense at trial, avoid the defense language and focus on the indemnification and hold harmless provisions.

When you are negotiating a contract, it is wise to retain counsel early in the negotiation process to help ensure the agreement is drafted to meet your needs and protect your best interests. Indemnification, hold harmless and defense clauses significantly impact the degree of your liability. Leslie S. Marell can help you understand the extent to which you are taking on or shifting risk in your agreement. To ensure that your contract provides you with the most protection from liability available, contact us to schedule an appointment. Our office is located in Torrance, California, but we proudly serve businesses of all sizes from all over the country.

 

Business

Essentials for Employment Contracts

When your business is ready to hire employees, it is essential to get legal help. An employment contract can be used to outline the legal relationship between your entity and your employees so there is no confusion regarding the rights and duties of the parties. Having an agreement in writing can help your business avoid misunderstandings and litigation in the future.

An employment contract should be drafted to meet your business’s specific needs and the job position covered in the agreement, but below are a few factors to consider:

  • The contract should set forth all information regarding how the employee will be paid, including salary, hourly wages, commissions and bonuses.
  • The hours the employee is expected to work should be defined, as well as whether the worker is expected to perform his or her job duties in the office or if he or she has the ability to work remotely.
  • If your business intends to grant equity in the company to attract employees, the terms should be detailed in the employee contract. This includes addressing topics such as the type of stock grant, exercise price, options for acceleration and vesting term.
  • Any benefits that will be provided to your employees should be covered in the agreement. Examples of benefits to address are 401k or pension programs, health insurance, vacation and sick leave, maternity or paternity leave and other similar perks of the job. The contract should specifically discuss any requirements that must be met before the benefits can be exercised.
  • You should have your employee sign a non-disclosure agreement (NDA). This could be a stand alone agreement, or it could be made a part of the employment contract. It is important to describe what must be kept confidential, as well as the consequences of violating the NDA provisions.
  • In most situations, you will want the contract to specify that the employment is “at will.” Otherwise, you should clearly set forth the term of employment. Additionally, the grounds for termination should be outlined and if compensation will be paid upon termination.
  • If your business is in a competitive industry, you may want to consider including a covenant not to compete for a certain period of time after the employee stops working for you. However, since the courts do not favor restraining an individual’s ability to work, you should obtain legal counsel in drafting these provisions and to determine if they are enforceable in your state. For example, California holds non-competition agreements to be unenforceable.

To ensure that your employment contract provides you with the most protection from liability available, contact Leslie S. Marell to schedule an appointment. Our office is located in Torrance, California, but we proudly serve businesses of all sizes from all over the country.

 

Contracts

Electronic Contracting: Think Before Hitting “Send!”

It is becoming a common practice for parties to use email to negotiate, review and revise contracts. While the internet makes it convenient and quicker, it can also inadvertently lead to liability. Courtrooms across the country are seeing an increase in the use of “electronic evidence.” You don’t want an opposing party to use your email exchanges as evidence of (or to disprove) the existence of a contract.

Pursuant to the Uniform Electronic Transactions Act of 1999 which has been adopted in all 50 states, a legally binding contract can be formed by use of electronic records. Electronic communications, including email, and even text messages, can be used to form binding legal contracts if the individuals have actual or apparent authority to do so. The essential requirements of a contract must still be met for the agreement to be enforceable, including an offer, acceptance and consideration exchanged between the parties. If the electronic evidence clearly establishes that these basic requirements have been met, it may be sufficient to prove the parties intended to be contractually bound and that a valid contract was formed.

How do you protect yourself when conducting contract negotiations via email? It is imperative that you are clear and succinct in outlining your intentions. All of your employees should receive detailed training regarding your business’s policies regarding electronic correspondence and to be careful in email to avoid terms such as “offer” or “accept” and to avoid unconditional “promises”. If you do not wish certain employees be able to form binding contracts by email, you should require that a prepared, blanket disclaimer paragraph be automatically inserted into every email that is sent from such employees. The disclaimer should include a statement that the sender of the email does not have authority to legally bind the company and any commitments on behalf of the company must be confirmed by either the appropriate department (such as purchasing) or the person’s manager. You should also include a statement that your business does not intend to be bound by an electronic contract and that all electronic correspondence is considered non-binding until the agreement is signed by the parties. Finally, if the other party gives you an indication that they are relying on your emails as forming a contract, you should take immediate action to set them straight. The quicker you clear up any confusion or misunderstandings, the less likely you are to be held liable.

To learn more about electronic contracts and how to protect yourself or how we can assist you with other business-related matters, contact Leslie S. Marell today.

Business, Contracts

3 Types of Agreements that Protect Your Proprietary Information

Does your business have an intangible asset that you need to protect from competitors? It could be an idea, customer list, computer code or other comparable assets. It is essential that you take steps to safeguard the aspects of your business that sets it apart from others. If you don’t do it now, it could mean costly litigation for you in the years to come.

How do your protect your intangible assets? The answer depends upon the unique circumstances surrounding your business, but the following are a few types of contracts that generally can be beneficial:

  • Intellectual property (IP). You might be surprised at what types of assets you can protect. Most businesses understand that they need a patent to protect a new invention, but you can also use a trademark to protect the source of your goods or services. Creative works can be protected by a copyright. Don’t assume you cannot protect your intangible asset. Confer with us and determine the best strategy for safeguarding your IP.
  • Non-Disclosure agreement. It should be mandatory for anyone who has access to your confidential information to sign a non-disclosure agreement. This includes your employees, independent contractors, vendors and customers. This type of agreement can limit when and how your business’s sensitive information is shared. It can also set forth your company’s available legal remedies if the contract is breached.
  • Non-Solicitation agreement. All of your main employees should execute an agreement preventing them from soliciting your business’s customers for a set period of time after they leave your employment. This type of agreement should also include a provision that your business is the owner of any IP developed while the person is working for your entity. Be aware, however, that these agreements must be carefully crafted to be enforceable and in California, they are unenforceable.

It is additionally wise to require all of your employees to password-protect their company computers with passwords, which are updated regularly. You should limit access to your confidential data to only those workers who must have it to properly perform their job duties. Your business should also back-up its digital data routinely.

If you need assistance creating any of the above contracts or you have questions regarding your company’s contractual needs, contact Leslie S. Marell for help. We serve as general counsel to clients who do not require, or choose not to employ, a full-time lawyer in-house. Call today to schedule your initial consultation.

Contracts

Four Agreements Your Business Should Have

Every business is unique and has its own legal needs. However, in my experience, four important contracts which are needed to safeguard an entity’s interests include:

Non-Disclosure Agreement

A non-disclosure agreement (also called a “confidentiality agreement”) is important to every company in every industry. This type of contract obligates third-parties to keep your private information confidential and limits the use of it to only permitted purposes set forth in the agreement. Without such a document, there are no restrictions on how or what the third party does with your confidential information. If the third-party breaches a non-disclosure agreement, it entitles you to recover remedies such as an injunction to stop the unlawful disclosure and/or damages. Even if the non-disclosure agreement is never used in litigation, it has a powerful effect by informing the third-party that they are privy to non-public information and there will be legal consequences if they violate the trust you are putting in them to safeguard it.

Purchase Order

When a transaction involves a buyer and a seller of goods or services, the purchase order (PO) becomes part of a contract between them. The PO should set forth the description, quantity, price, applicable discounts, payment terms, date of shipment, authorized signature, and any other important information relevant to the purchase. A buyer can implement PO tracking to manage inventory, improve clear communication, and create a sales history.

Sales Terms & Conditions

Outlining the sale terms is vital to protecting your business. It is a necessary document when you are doing business with your customers who issue you a PO. The terms and conditions of a transaction include topics such as exclusion of warranties, limiting remedies and narrow indemnification language. It is important to work with your legal counsel to identify issues that could have a detrimental impact on your business and properly address them in the sale terms of your contracts.

Intellectual Property Assignment Agreement

An Intellectual Property Assignment Agreement should be signed by all applicable independent contractors and vendors that work for your company when they are hired. Don’t make the mistake of believing that your business automatically owns the work produced by an independent contractor simply because you are paying them for it. An independent contractor is treated differently under the law than one of your full-time employees. To ensure that your entity owns the independent contractor’s contributions, you must have a written agreement that transfers the copyright to your company.

If you need assistance creating any of the above contracts or you have questions regarding your company’s contractual needs, contact Leslie S. Marell for help. We serve as general counsel to clients who do not require, or choose not to employ, a full-time lawyer in-house. Call today to schedule your initial consultation.

Buyer, Seller

Verbal Agreements to Buy/Sell Goods – Are They Enforceable?

Are verbal agreements to buy/sell goods real agreements?  In other words, are they enforceable?

If your company is involved with buying goods from suppliers or vendors, or selling goods to customers, you no doubt have many standard forms and agreements prepared by your corporate attorney, or at least standard operating procedures for contracting.  However, occasionally a customer or supplier will ask for something verbally—a last minute rush order, a missing part, a ‘handshake’ deal, and you might verbally agree to it on behalf of your company.  The question is whether or not this “agreement” is legally binding.

Generally speaking, any promise to buy goods (meaning anything tangible, including material, equipment, product and even off the shelf software) from a supplier, or sell goods to a customer in an amount over $500 is NOT legally finding.  The Uniform Commercial Code (U.C.C.) requires all contracts for the sale of goods (not services) must be in writing if they are over $500.  However, there are some notable exceptions to this rule:

  1. Merchant exception: This is the most significant exception applicable to businesses. If the verbal agreement is between merchants (two businesses), and one of the merchants confirms the deal in writing, that writing will be binding on the recipient merchant even if the recipient merchant does not countersign their acceptance….unless the recipient objects to that writing within ten days of receipt. In other words: if you confirm your agreement via email to your supplier (or customer) that document will fit within this exception.
  2. Where the supplier has already started performance, and the goods are being manufactured specifically for the purchaser.
  3. Where the supplier has partially or fully completed performance.
  4. Where the buyer admits in court testimony or legal pleadings that he or she made a verbal contract.
  5. Where the supplier had relied on the verbal promise to his or her own detriment.

Of course, it is always best to get things in writing! Where the supplier can demonstrate one of the exceptions, it has an argument that the verbal agreement is a binding contract.

If your company needs assistance with developing vendor or customer contracts, or has other contracting questions, attorney Leslie S. Marell can help.  Leslie has more than 25 years of experience as in-house counsel and as a legal adviser working with businesses, business people, and business contracts, in the technology, manufacturing, software, and medical device industries.  She understands the real-world practicalities of what it takes to draft, review, and negotiate corporate contracts, and has presented her dynamic seminars to Fortune 500 companies and small to mid-sized businesses across the country.  Leslie specializes in helping contract analysts, project managers, and department leaders work better with their own internal legal departments and outside counsel.  To learn more about Leslie’s seminars, or get expert advice on contracting matters, contact Leslie at (310) 372-8663, or visit her online.