Advanced Licensing Agreements 2017 - Practising Law …download.pli.edu/WebContent/chbs/185480/185480_Chapter25_Adv... · Advanced Licensing Agreements 2017 Volume Two INTELLECTUAL

© Practising Law Institute

To order this book, call (800) 260-4PLI or fax us at (800) 321-0093. Ask our Customer Service Department for PLI Order Number 185480, Dept. BAV5.

Practising Law Institute1177 Avenue of the Americas

New York, New York 10036

Advanced Licensing Agreements 2017

Volume Two

INTELLECTUAL PROPERTYCourse Handbook Series

Number G-1308

Co-ChairsMarcelo Halpern

Ira Jay LevyJoseph Yang


24

Open Source Issues and Opportunities (PowerPoint slides)

David G. Rickerby

Boston Technology Law, PLLC

If you find this article helpful, you can learn more about the subject by going to www.pli.edu to view the on demand program or segment for which it was written.

2-315


2-316


Ope

n So

urce

Issu

es a

nd

Opp

ortu

niti

es

Prac

ticin

gLa

wIn

stitu

teA

dvan

ced

Lice

nsin

g A

gree

men

ts 2

017

May

12th

2017

10

:45

AM

-12

:15

PMD

avid

G. R

icke

rby

2-317


Ove

rvie

w

Intr

oduc

tion

to O

pen

Sour

ce

Enfo

rced

Sha

ring

Man

agin

g O

pen

Sour

ce

2-318


Wha

t is

Ope

n So

urce

?

“Ope

n” “

Sour

ce”

–A

ny s

oftw

are

licen

sing

m

odel

that

mak

es th

e so

urce

ava

ilabl

e to

co

py, d

istr

ibut

e, m

odify

, etc

.

2-319


Wha

t is

Sour

ce C

ode?

The

hum

an re

adab

le v

ersi

on o

f the

cod

e.

Expo

ses

trad

e se

cret

s, in

terf

aces

, and

logi

c.

2-320


As

oppo

sed

to O

bjec

t Cod

e…

2-321


Ope

n So

urce

is B

ig B

usin

ess

AN

DR

OID

-D

ecla

red

licen

se: A

pach

e 2.

0~1

85 c

ompo

nent

s~1

9 di

ffere

nt O

SS

lice

nses

-m

ost r

ecip

roca

l

2-322


Man

y O

rgan

izat

ions

2-323


FFina

ncia

l Ser

vice

s

Aut

omot

ive

Mob

ile

Ever

ythi

ng

Hea

lthca

re

Solv

ing

Prob

lem

s in

Man

y In

dust

ries

2-324


So, w

hat’

s th

e bi

g de

al?

Why

isn’

t thi

s ju

st li

ke a

co

mm

erci

al li

cens

e?

In m

any

way

s th

ey a

re th

e sa

me:

Both

com

mer

cial

and

ope

n so

urce

lice

nses

are

bas

ed

on o

wne

rshi

p of

inte

llect

ual p

rope

rty.

Both

gra

nt c

erta

in r

ight

s an

d re

tain

oth

ers.

Both

are

gov

erne

d by

the

sam

e la

ws.

Both

may

incl

ude

prov

isio

ns w

hich

may

be

inco

mpa

tible

with

the

othe

r ty

pe o

f lic

ense

, and

, in

deed

with

oth

er li

cens

es o

f the

sam

e ty

pe.

2-325


But…

Ope

n So

urce

Lic

ense

s:

Tend

to h

ave

diff

eren

t goa

ls

Are

usu

ally

wri

tten

by

and

for

deve

lope

rs n

ot la

wye

rs

Enco

urag

e un

cont

rolle

d co

mbi

natio

n an

d re

use

of th

e IP

Form

a c

ontr

act i

n a

diff

eren

t way

than

mos

t com

mer

cial

lic

ense

s (in

fact

som

e ar

gue

they

don

’t fo

rm a

con

trac

t at a

ll –

mer

ely

act a

s a

perm

issi

on)

AN

D Som

eop

en s

ourc

e lic

ense

s im

pose

sha

ring

obl

igat

ions

on

use

rs

2-326


Two

Bas

ic S

choo

ls o

f Ope

n S

ourc

eFO

SS (F

ree

and

Ope

n So

urce

Sof

twar

e)

–Re

quir

es li

cens

or t

o m

ake

impr

ovem

ents

or

enha

ncem

ents

av

aila

ble

unde

r si

mila

r te

rms

–Pr

imar

y ex

ampl

e is

the

GPL

: Lic

ense

e m

ust d

istr

ibut

e “w

ork

base

d on

the

prog

ram

” an

d ca

use

such

wor

ks to

be

licen

sed

… u

nder

the

term

s of

the

GPL

Aca

dem

ic/P

erm

issi

ve

–M

odifi

catio

ns/e

nhan

cem

ents

may

rem

ain

prop

riet

ary

–D

istr

ibut

ion

in s

ourc

e co

de o

r ob

ject

cod

e pe

rmitt

ed

prov

ided

cop

yrig

ht n

otic

e &

liab

ility

dis

clai

mer

are

incl

uded

an

d co

ntri

buto

rs’ n

ames

are

not

use

d to

end

orse

pro

duct

s–

Prim

ary

exam

ples

: Ber

kele

y So

ftw

are

Dis

trib

utio

n (B

SD),

Apa

che

Soft

war

e Li

cens

e

2-327


Free

Sof

twar

e D

efin

ition

fro

m th

e Fr

ee S

oftw

are

Foun

datio

n

“Fre

e so

ftw

are”

is a

mat

ter

of li

bert

y, n

ot p

rice

. To

unde

rsta

nd th

e co

ncep

t, y

ou s

houl

d th

ink

of “

free

” as

in “

free

spe

ech,

” no

t as

in “

free

be

er.”

Free

sof

twar

e is

a m

atte

r of

the

user

s' fr

eedo

m to

run

, cop

y, d

istr

ibut

e,

stud

y, c

hang

e an

d im

prov

e th

e so

ftw

are.

Mor

e pr

ecis

ely,

it m

eans

that

th

e pr

ogra

m's

use

rs h

ave

the

four

ess

entia

l fre

edom

s:

The

free

dom

to r

un th

e pr

ogra

m, f

or a

ny p

urpo

se (f

reed

om 0

).

The

free

dom

to s

tudy

how

the

prog

ram

wor

ks, a

nd c

hang

e it

to m

ake

it do

wha

t you

wis

h (f

reed

om 1

). A

cces

s to

the

sour

ce c

ode

is a

pre

cond

ition

fo

r th

is.

The

free

dom

to r

edis

trib

ute

copi

es s

o yo

u ca

n he

lp y

our

neig

hbor

(f

reed

om 2

).

The

free

dom

to d

istr

ibut

e co

pies

of y

our

mod

ified

ver

sion

s to

oth

ers

(fre

edom

3).

By d

oing

this

you

can

giv

e th

e w

hole

com

mun

ity a

cha

nce

to

bene

fit fr

om y

our

chan

ges.

Acc

ess

to th

e so

urce

cod

e is

a p

reco

nditi

on fo

r th

is.

from

http

://w

ww

.gnu

.org

/phi

loso

phy/

free-

sw.h

tml

2-328


Prin

cipl

es o

f Ope

n So

urce

Lic

ensi

ng

from

the

Ope

n So

urce

Initi

ativ

e

1.Fr

ee[U

nres

tric

ted]

Redi

stri

butio

n

2.

Prog

ram

mus

t inc

lude

Sou

rce

Code

and

mus

t allo

w

dist

ribu

tion

in s

ourc

e co

de a

s w

ell a

s co

mpi

led

form

.

3.

Mus

t Allo

w M

odifi

catio

ns a

nd D

eriv

ed W

orks

4.

Inte

grity

of t

he A

utho

r's S

ourc

e Co

de

5.

No

Dis

crim

inat

ion

Aga

inst

Per

sons

or

Gro

ups

6.

No

Dis

crim

inat

ion

Aga

inst

Fie

lds

of E

ndea

vor

7.

Dis

trib

utio

n of

Lic

ense

–no

add

ition

al li

cens

e ca

n be

req

uire

d of

oth

ers

who

redi

stri

bute

the

pro

gram

8.

Lice

nse

Mus

t Not

Be

Spec

ific

to a

Pro

duct

9.

Lice

nse

Mus

t Not

Res

tric

t O

ther

Sof

twar

e

10.

Lice

nse

Mus

t Be

Tech

nolo

gy-N

eutr

al –

not p

redi

cate

d on

any

in

divi

dual

tech

nolo

gy from

http

://w

ww

.ope

nsou

rce.

org/

docs

/osd

2-329


78 C

urre

nt O

SI A

ppro

ved

Lice

nses

(ww

w.o

pens

ourc

e.or

g)

1.A

cade

mic

Fre

e Li

cens

e 3.

0 (A

FL-

3.0)

2.A

ffer

oG

ener

al P

ublic

Lic

ense

3.0

(A

GPL

-3.0

)3.

Ada

ptiv

e Pu

blic

Lic

ense

(APL

-1.0

)4.

Apa

che

Lice

nse

2.0

5.A

pple

Pub

lic S

ourc

e Li

cens

e 6.

Art

istic

lice

nse

2.0

7.A

ttri

butio

n A

ssur

ance

Lic

ense

s (A

AL)

8.BS

D 3

-Cla

use

"New

" or

"Re

vise

d"

Lice

nse

(BSD

-3-C

laus

e)9.

BSD

2-C

laus

e "S

impl

ified

" or

"F

reeB

SD"

Lice

nse

(BSD

-2-C

laus

e)10

.Bo

ost S

oftw

are

Lice

nse

(BSL

-1.0

)11

.Ce

CILL

Lice

nse

2.1

(CEC

ILL-

2.1)

12.

Com

pute

r A

ssoc

iate

s Tr

uste

d O

pen

Sour

ce L

icen

se 1

.1 (C

ATO

SL-

1.1)

13.

Com

mon

Dev

elop

men

t and

D

istr

ibut

ion

Lice

nse

1.0

(CD

DL-

1.0)

14.

Com

mon

Pub

lic A

ttri

butio

n Li

cens

e 1.

0 (C

PAL-

1.0)

15.

CUA

Off

ice

Publ

ic L

icen

se V

ersi

on

1.0

16.

EU D

ataG

rid

Soft

war

e Li

cens

e 17

.Ec

lipse

Pub

lic L

icen

se 1

.0 (E

PL-1

.0)

18.

eCos

Lice

nse

vers

ion

2.0

19.

Educ

atio

nal C

omm

unity

Lic

ense

, Ve

rsio

n 2.

0 (E

CL-2

.0)

20.

Eiff

el F

orum

Lic

ense

V2.

0 (E

FL-2

.0)

21.

Ente

ssa

Publ

ic L

icen

se (E

ntes

sa)

22.

Euro

pean

Uni

on P

ublic

Lic

ense

, Ve

rsio

n 1.

1 (E

UPL

-1.1

) 23

.Fa

ir L

icen

se (F

air)

24.

Fram

ewor

xLi

cens

e (F

ram

ewor

x-1.

0)

25.

Free

Pub

lic L

icen

se 1

.0.0

26.

GN

U A

ffer

oG

ener

al P

ublic

Lic

ense

v3

(AG

PL-3

.0)

27.

GN

U G

ener

al P

ublic

Lic

ense

ve

rsio

n 2.

0 (G

PL-2

.0)

28.

GN

U G

ener

al P

ublic

Lic

ense

ve

rsio

n 3.

0 (G

PL-3

.0)

29.

GN

U L

ibra

ry o

r "L

esse

r" G

ener

al

Publ

ic L

icen

se v

ersi

on 2

.1 (L

GPL

-2.

1)30

.G

NU

Lib

rary

or

"Les

ser"

Gen

eral

Pu

blic

Lic

ense

ver

sion

3.0

(LG

PL-

3.0)

31.

His

tori

cal P

erm

issi

on N

otic

e an

d D

iscl

aim

er (H

PND

)32

.IB

M P

ublic

Lic

ense

1.0

(IPL

-1.0

)33

.IP

A F

ont L

icen

se (I

PA)

34.

ISC

Lice

nse

(ISC)

35.

LaTe

XPr

ojec

t Pub

lic L

icen

se 1

.3c

36.

Lice

nce

Libr

edu

Que

bec

–Pe

rmis

sive

v.1

.1

37.

Lice

nse

Libr

edu

Que

bec

–Re

cipr

ocite

38.

Lice

nse

Libr

ede

Que

bec-

Reci

prio

teFo

rte

39.

Luce

nt P

ublic

Lic

ense

Ver

sion

1.0

2 40

.M

irO

SLi

cenc

e(M

irO

S)41

.M

icro

soft

Pub

lic L

icen

se (M

S-PL

)42

.M

icro

soft

Rec

ipro

cal L

icen

se (M

S-RL

)43

.M

IT li

cens

e (M

IT)

44.

Mot

osot

oLi

cens

e (M

otos

oto)

45.

Moz

illa

Publ

ic L

icen

se 2

.0 (M

PL-

2.0)

46.

Mul

tics

Lice

nse

(Mul

tics)

47.

NA

SA O

pen

Sour

ce A

gree

men

t 1.3

48

.N

TP L

icen

se (N

TP)

49.

Nau

men

Publ

ic L

icen

se (N

aum

en)

50.

Net

hack

Gen

eral

Pub

lic L

icen

se

51.

Nok

ia O

pen

Sour

ce L

icen

se (N

okia

)52

.N

on-P

rofit

Ope

n So

ftw

are

Lice

nse

3.0

53.

OCL

C Re

sear

ch P

ublic

Lic

ense

2.0

54

.O

pen

Gro

up T

est S

uite

Lic

ense

55

.O

pen

Soft

war

e Li

cens

e 3.

0 (O

SL-

3.0)

56.

OSE

T Pu

blic

Lic

ense

ver

sion

2.1

57

.PH

P Li

cens

e 3.

0 (P

HP-

3.0)

58.

The

Post

greS

QL

Lice

nse

(Pos

tgre

SQL)

59.

Pyth

on L

icen

se (P

ytho

n-2.

0)

60.

CNRI

Pyt

hon

licen

se (C

NRI

-Pyt

hon)

(C

NRI

por

tion

of P

ytho

n Li

cens

e)61

.Q

Pub

lic L

icen

se (Q

PL-1

.0)

62.

Real

Net

wor

ksPu

blic

Sou

rce

Lice

nse

V1.0

(RPS

L-1.

0)63

.Re

cipr

ocal

Pub

lic L

icen

se 1

.5

64.

Rico

h So

urce

Cod

e Pu

blic

Lic

ense

65

.Si

mpl

e Pu

blic

Lic

ense

2.0

(Sim

PL-

2.0)

66.

Slee

pyca

tLic

ense

(Sle

epyc

at)

67.

Sun

Publ

ic L

icen

se 1

.0 (S

PL-1

.0)

68.

Syba

se O

pen

Wat

com

Publ

ic

Lice

nse

1.0

(Wat

com

-1.0

)69

.U

nive

rsity

of I

llino

is/N

CSA

Ope

n So

urce

Lic

ense

(NCS

A)

70.

Uni

vers

al P

erm

issi

ve L

icen

se (U

PL)

71.

Vovi

daSo

ftw

are

Lice

nse

v. 1

.0

72.

W3C

Lic

ense

(W3C

)73

.w

xWin

dow

sLi

brar

y Li

cens

e (W

Xwin

dow

s)74

.X.

Net

Lice

nse

(Xne

t)75

.Ze

ro C

laus

e BS

D L

icen

se76

.Zo

pePu

blic

Lic

ense

2.0

(ZPL

-2.0

)77

.zl

ib/l

ibpn

glic

ense

(Zlib

)

2-330


10 M

ost

Com

mon

Ope

n So

urce

Lic

ense

s

Note

: The

table

above

lis

ts t

he

top lic

ense

s th

at a

re u

sed in o

pen

sourc

e pro

ject

s ra

nke

d b

y num

ber

of

pro

ject

s usi

ng t

he

licen

se,

acco

rdin

g t

o t

he

Bla

ck D

uck

Soft

war

e Know

ledgeB

ase.

This

dat

a w

as p

ulle

d o

n

Oct

ob

er

20

, 2

01

6.

1.M

IT L

icen

se28

%

2.G

NU

Gen

eral

Pub

lic L

icen

se (G

PL)

2.0

20

%3.

Apa

che

Lice

nse

2.0

16%

4.G

NU

Gen

eral

Pub

lic L

icen

se (G

PL)

3.0

8%

5.B

SD

Lic

ense

2.0

(3-c

laus

e, N

ew o

r Rev

ised

) Lic

ense

6%

6.A

rtist

ic L

icen

se (P

erl)

4%

7.G

NU

Les

ser G

ener

al P

ublic

Lic

ense

(LG

PL)

2.1

4%

8.IS

C L

icen

se4%

9.G

NU

Les

ser G

ener

al P

ublic

Lic

ense

(LG

PL)

3.0

2%

10.

Mic

roso

ft P

ublic

Lic

ense

2%

2-331


An

over

sim

plifi

ed s

umm

ary:

FOSS

Lic

ense

s (G

PL2,

GPL

3, A

ffer

oG

PL, L

GPL

) are

goi

ng

to r

equi

re y

ou to

mak

e th

e so

urce

cod

e av

aila

ble

unde

r th

e sa

me

licen

sefo

r the

ope

n so

urce

pro

gram

and

for

any

wor

k yo

u di

stri

bute

whi

ch is

bas

ed o

n th

e pr

ogra

m.

Man

y ot

her O

pen

Sour

ce li

cens

es (M

ozill

a, C

PL) a

re

goin

g to

requ

ire

you

to m

ake

avai

labl

e m

odifi

catio

ns y

ou

mak

e to

the

open

sou

rce

prog

ram

, but

not

wor

ks w

hich

in

terf

ace

with

it.

A fe

w o

pen

sour

ce li

cens

es (A

pach

e, B

SD) a

re g

oing

to

let y

ou d

o pr

etty

muc

h w

hate

ver y

ou w

ant w

ith th

e co

de

as lo

ng a

s yo

u gi

ve a

ppro

pria

te c

redi

t and

dis

clai

m a

ll w

arra

ntie

s an

d lia

bilit

y (t

here

is n

o su

ch th

ing

as a

free

lu

nch)

.

2-332


Enfo

rced

Sha

ring

: GPL

v2

“[T]

he in

tent

is to

exe

rcis

e th

e ri

ght t

o co

ntro

l the

di

stri

butio

n of

der

ivat

ive

or c

olle

ctiv

ew

orks

bas

ed o

n th

e Pr

ogra

m.”

“You

mus

t cau

se a

ny w

ork

that

you

dis

trib

ute

or

publ

ish,

that

in w

hole

or i

n pa

rt c

onta

ins

or is

de

rive

dfr

om th

e Pr

ogra

m o

r an

y pa

rt th

ereo

f, to

be

licen

sed

as a

who

le a

t no

cha

rge

to a

ll th

ird

part

ies

unde

r th

e te

rms

of th

is L

icen

se.”

http

://w

ww.

gnu.

org/

licen

ses/

gpl.h

tml

2-333


Enf

orce

d S

harin

g: L

GP

L

5.A

pro

gram

that

con

tain

s no

der

ivat

ive

of a

ny p

ortio

n of

the

Libr

ary,

but

is d

esig

ned

to w

ork

with

the

Libr

ary

by b

eing

co

mpi

led

or li

nked

with

it, i

s ca

lled

a "w

ork

that

use

s th

e Li

brar

y". S

uch

a w

ork,

in is

olat

ion,

is n

ot a

der

ivat

ive

wor

k of

th

e Li

brar

y, a

nd th

eref

ore

falls

out

side

the

scop

e of

this

Lic

ense

.

How

ever

, lin

king

a "

wor

k th

at u

ses

the

Libr

ary"

wit

h th

e Li

brar

y cr

eate

s an

exe

cuta

ble

that

is a

der

ivat

ive

of th

e Li

brar

y (b

ecau

se it

con

tain

s po

rtio

ns o

f the

Lib

rary

), ra

ther

than

a

"wor

k th

at u

ses

the

libra

ry".

The

exe

cuta

ble

is th

eref

ore

cove

red

by th

is L

icen

se. S

ecti

on 6

sta

tes

term

s fo

r di

stri

buti

on

of s

uch

exec

utab

les.

http

://w

ww

.gnu

.org

/lice

nses

/lgpl

.htm

l

2-334


Enfo

rced

Sha

ring

: LG

PL

http

://w

ww

.gnu

.org

/lice

nses

/lgpl

.htm

l

6.A

s an

exc

eptio

n to

the

Sect

ions

abo

ve, y

ou m

ay a

lso

com

bine

or l

ink

a "w

ork

that

us

es th

e Li

brar

y" w

ith th

e Li

brar

y to

pro

duce

a w

ork

cont

aini

ng p

ortio

ns o

f the

Li

brar

y, a

nd d

istr

ibut

e th

at w

ork

unde

r ter

ms

of y

our c

hoic

e, p

rovi

ded

that

the

te

rms

perm

it m

odifi

cati

on o

f the

wor

k fo

r th

e cu

stom

er's

ow

n us

e an

d re

vers

e en

gine

erin

g fo

r de

bugg

ing

such

mod

ifica

tion

s.

You

mus

t giv

e pr

omin

ent n

otic

e w

ith e

ach

copy

of t

he w

ork

that

the

Libr

ary

is u

sed

in it

and

that

the

Libr

ary

and

its u

se a

re c

over

ed b

y th

is L

icen

se. Y

ou m

ust s

uppl

y a

copy

of t

his

Lice

nse.

If th

e w

ork

durin

g ex

ecut

ion

disp

lays

cop

yrig

ht n

otic

es, y

ou

mus

t inc

lude

the

copy

right

not

ice

for t

he L

ibra

ry a

mon

g th

em, a

s w

ell a

s a

refe

renc

e di

rect

ing

the

user

to th

e co

py o

f thi

s Li

cens

e. A

lso,

you

mus

t do

one

of

thes

e th

ings

:

a)A

ccom

pany

the

wor

k w

ith th

e co

mpl

ete

corr

espo

ndin

g m

achi

ne-r

eada

ble

sour

ce

code

for t

he L

ibra

ry in

clud

ing

wha

teve

r cha

nges

wer

e us

ed in

the

wor

k …

b)U

se a

sui

tabl

e sh

ared

libr

ary

mec

hani

sm fo

r lin

king

with

the

Libr

ary.

…

c)A

ccom

pany

the

wor

k w

ith a

writ

ten

offe

r, va

lid fo

r at l

east

thre

e ye

ars,

to g

ive

the

sam

e us

er th

e m

ater

ials

spe

cifie

d in

Sub

sect

ion

6a, a

bove

, for

a c

harg

e no

mor

e th

an th

e co

st o

f per

form

ing

this

dis

trib

utio

n. …

2-335


Enfo

rced

Sha

ring

: GPL

v3

You

may

con

vey

a co

vere

d w

ork

in o

bjec

t cod

e fo

rm u

nder

the

term

s of

se

ctio

ns 4

and

5, p

rovi

ded

that

you

als

o co

nvey

the

mac

hine

-rea

dabl

e Co

rres

pond

ing

Sour

ce u

nder

the

term

s of

this

Lic

ense

…

A “

cove

red

wor

k” m

eans

eith

er th

e un

mod

ified

Pro

gram

or a

wor

k ba

sed

on th

e Pr

ogra

m.

To “

prop

agat

e” a

wor

k m

eans

to d

o an

ythi

ng w

ith it

that

, with

out

perm

issi

on, w

ould

mak

e yo

u di

rect

ly o

r sec

onda

rily

liabl

e fo

r inf

ringe

men

t un

der a

pplic

able

cop

yrig

ht la

w, e

xcep

t exe

cutin

g it

on a

com

pute

r or

mod

ifyin

g a

priv

ate

copy

. Pro

paga

tion

incl

udes

cop

ying

, dis

trib

utio

n (w

ith

or w

ithou

t mod

ifica

tion)

, mak

ing

avai

labl

e to

the

publ

ic, a

nd in

som

e co

untr

ies

othe

r act

iviti

es a

s w

ell.

To “

conv

ey”

a w

ork

mea

ns a

ny k

ind

of p

ropa

gatio

n th

at e

nabl

es o

ther

pa

rtie

s to

mak

e or

rece

ive

copi

es. M

ere

inte

ract

ion

with

a u

ser t

hrou

gh a

co

mpu

ter n

etw

ork,

with

no

tran

sfer

of a

cop

y, is

not

con

veyi

ng.

2-336


Enfo

rced

Sha

ring

: Wha

t is

a D

eriv

ativ

e W

ork?

The

Copy

righ

t Act

doe

sn’t

rea

lly h

elp

for

Soft

war

e:

§10

1,

A “

deri

vativ

e w

ork”

is a

wor

k ba

sed

upon

one

or

mor

e pr

eexi

stin

g w

orks

, suc

h as

a tr

ansl

atio

n, m

usic

al a

rran

gem

ent,

dr

amat

izat

ion,

fict

iona

lizat

ion,

mot

ion

pict

ure

vers

ion,

sou

nd

reco

rdin

g, a

rt r

epro

duct

ion,

abr

idgm

ent,

con

dens

atio

n, o

r an

y ot

her

form

in w

hich

a w

ork

may

be

reca

st, t

rans

form

ed, o

r ad

apte

d.

A w

ork

cons

istin

g of

edi

tori

al r

evis

ions

, ann

otat

ions

, ela

bora

tions

, or

oth

er m

odifi

catio

ns w

hich

, as

a w

hole

, rep

rese

nt a

n or

igin

al w

ork

of a

utho

rshi

p, is

a “

deri

vativ

e w

ork.

”

§10

2(b)

, In

no

case

doe

s co

pyri

ght p

rote

ctio

n fo

r an

ori

gina

l wor

k of

aut

hors

hip

exte

nd to

any

idea

, pro

cedu

re, p

roce

ss, s

yste

m,

met

hod

of o

pera

tion,

con

cept

, pri

ncip

le, o

r di

scov

ery,

reg

ardl

ess

of

the

form

in w

hich

it is

des

crib

ed, e

xpla

ined

, illu

stra

ted,

or

embo

died

in s

uch

wor

k.

2-337


Abs

trac

tion,

Filt

ratio

n, C

ompa

riso

n Te

st

–2nd

, 5th

, 10th

and

11th

Circ

uit,

Com

pute

r A

ssoc

iate

s In

tl., I

nc.

v. A

ltai,

Inc.

, 982

F.2

d 69

3 (2

nd C

ir. 1

992)

;

Abs

trac

t fr

om th

e or

igin

al p

rogr

am it

s co

nstit

uent

st

ruct

ural

par

ts.

Filte

r un

prot

ecte

d po

rtio

ns (i

ncor

pora

ted

idea

s,

expr

essi

on n

eces

sary

to th

ose

idea

s, a

nd p

ublic

dom

ain

elem

ents

).

Com

pare

any

and

all

rem

aini

ng c

reat

ive

expr

essi

on w

ith

stru

ctur

e of

2nd

prog

ram

to d

eter

min

e w

heth

er

deri

vativ

e.

–1st

Circ

uit h

as a

mod

ified

ver

sion

that

app

lies

the

test

onl

y af

ter

filte

ring

out

§10

2(b)

unp

rote

cted

ele

men

ts –

part

icul

arly

met

hods

of o

pera

tion

or c

ontr

ol.

(Lot

us

Dev

elop

men

t Cor

p. v

. Bor

land

Int’

l., In

c., 4

9 F.

3d 8

07 (1

st C

ir.

1995

)).

Enfo

rced

Sha

ring

: Wha

t is

a D

eriv

ativ

e W

ork?

2-338


Ana

lytic

Dis

sect

ion

Test

9th

Circ

uit h

as a

dopt

ed th

e an

alyt

ic d

isse

ctio

n te

st (A

pple

Co

mpu

ter,

Inc.

v. M

icro

soft

Cor

p., 3

5 F.

3d 1

435

(9th

Cir

. 199

4))

Are

ther

e su

bsta

ntia

l sim

ilari

ties

in b

oth

the

idea

s an

d ex

pres

sion

s of

the

wor

ks?

Are

the

sim

ilar

feat

ures

(if a

ny) p

rote

cted

by

copy

righ

t?

“Thi

n” p

rote

ctio

n is

giv

en to

non

-cop

yrig

htab

le fa

cts

or id

eas

that

ar

e pr

otec

tabl

e be

caus

e of

how

they

are

com

bine

d/pr

esen

ted.

“B

road

” pr

otec

tion

is g

iven

to c

opyr

ight

able

exp

ress

ion.

Dep

endi

ng o

n th

e de

gree

of p

rote

ctio

n, c

ourt

set

s st

anda

rd fo

r co

mpa

riso

n of

wor

ks a

s a

who

le to

det

erm

ine

if de

riva

tive.

“Th

in”

prot

ectio

n re

quir

es v

irtu

ally

iden

tical

; “br

oad”

pro

tect

ion

requ

ires

on

ly a

“su

bsta

ntia

l sim

ilari

ty.”

Enfo

rced

Sha

ring

: Wha

t is

a D

eriv

ativ

e W

ork?

2-339


Ora

cle

v. G

oogl

e –

prot

ectio

n of

API

s

In 2

012,

Dis

tric

t Co

urt d

ecid

ed th

at th

e co

mm

and

stru

ctur

e an

d ta

xono

my

of th

e A

PIs

wer

e no

t pro

tect

able

und

er c

opyr

ight

law

.

On

May

9, 2

014,

the

Fede

ral C

ircu

it pa

rtia

lly r

ever

sed

the

dist

rict

co

urt r

ulin

g, r

ulin

g in

Ora

cle'

s fa

vor

on th

e co

pyri

ghta

bilit

yis

sue,

an

d re

man

ded

the

issu

e of

fair

use

to th

e di

stri

ct c

ourt

.

A p

etiti

on fo

r ce

rtio

rari

was

den

ied

by th

e U

nite

d St

ates

Su

prem

e Co

urt o

n Ju

ne 2

9, 2

015.

A s

econ

d tr

ial b

egan

on

May

9, 2

016

–O

racl

e re

ques

ted

8.8B

in

dam

ages

.

The

tria

l jur

y si

ded

in fa

vor

of G

oogl

e, r

ulin

g th

e ac

tion

to b

e fa

ir

use.

(May

29,

201

6).

Enfo

rced

Sha

ring

: Wha

t is

a D

eriv

ativ

e W

ork?

2-340


> A

N O

VER

SIM

IPLI

FACT

ION

OF

A C

OM

PLEX

CA

SE

Goo

gle

wro

te it

s ow

n ve

rsio

n of

Java

for

And

roid

usi

ng th

e sa

me

“tax

onom

y of

all

the

nam

es o

f met

hods

, cla

sses

, int

erfa

ces,

and

pa

ckag

es”

as O

racl

e’s

Java

.

Que

stio

n as

to c

opyr

ight

abili

tyof

a ta

xono

my/

API

. Arg

umen

t tha

t thi

s el

emen

t of s

oftw

are

is p

urel

y fu

nctio

nal a

nd n

eces

sary

for

tech

nolo

gy

syst

ems

to s

peak

to o

ne a

noth

er.

Fede

ral C

ircu

it ov

erru

led

Dis

tric

t Cou

rt fi

ndin

g en

ough

cre

ativ

ity fo

r co

pyri

ght p

urpo

ses,

but

sen

t cas

e ba

ck fo

r re

tria

l on

the

ques

tion

of F

air

Use

.

Goo

gle

won

the

retr

ial r

ulin

g th

e ac

tion

to b

e fa

ir u

se.

Broa

d im

plic

atio

ns fo

r us

e op

en s

ourc

e. D

oes

inte

rope

rabi

lity

mak

e ev

eryt

hing

der

ivat

ive?

Enfo

rced

Sha

ring

: Wha

t is

a D

eriv

ativ

e W

ork?

2-341


Keys

to

Ope

n So

urce

The

key

to a

ny o

pen

sour

ce a

naly

sis

is th

e sa

me:

–Kn

ow a

nd u

nder

stan

d th

e fa

cts

–Re

ad th

e lic

ense

–Kn

ow th

e no

rms

of th

e co

mm

unity

from

whi

ch y

ou

are

taki

ng th

e so

urce

–Pl

ay n

ice

2-342


GPL

v3,

LG

PL v

3, A

GPL

Oth

er c

omm

erci

al c

once

rns:

–A

nti-D

RM

“No

cove

red

wor

k sh

all b

e de

emed

par

t of a

n ef

fect

ive

tech

nolo

gica

l mea

sure

und

er a

ny a

pplic

able

law

fulfi

lling

ob

ligat

ions

und

er a

rtic

le 1

1 of

the

WIP

O c

opyr

ight

trea

ty

adop

ted

on 2

0 D

ecem

ber

1996

, or

sim

ilar l

aws

proh

ibiti

ng o

r re

stri

ctin

g ci

rcum

vent

ion

of s

uch

mea

sure

s. “

–A

nti-t

ivoi

zatio

nIf

you

conv

ey a

n ob

ject

cod

e w

ork

... in

, or

with

, or

spec

ifica

lly

for

use

in, a

Use

r Pr

oduc

t, a

nd th

e co

nvey

ing

occu

rs a

s pa

rt o

f a

tran

sact

ion

in w

hich

the

righ

t of p

osse

ssio

n an

d us

e of

the

Use

r Pr

oduc

t is

tran

sfer

red

to th

e re

cipi

ent i

n pe

rpet

uity

or

for

a fix

ed te

rm (r

egar

dles

s of

how

the

tran

sact

ion

is c

hara

cter

ized

), th

e Co

rres

pond

ing

Sour

ce ..

. mus

t be

acco

mpa

nied

by

the

Inst

alla

tion

Info

rmat

ion.

–Pa

tent

Lic

ense

Gra

nt /

Pate

nt N

on-A

sser

tion

as L

icen

se C

ondi

tion

–A

GPL

Com

patib

ility

2-343


Focu

s is

Com

plia

nce

Com

pani

es a

re a

dopt

ing

open

sou

rce

polic

ies

and

proc

esse

s:–

To a

llevi

ate

litig

atio

n co

ncer

ns–

As

an im

port

ant M

&A

Issu

e–

To c

ompl

y w

ith C

usto

mer

dili

genc

e–

Mor

e pa

rtic

ipat

ion

in o

pen

sour

ce

com

mun

ities

: wha

t are

you

r em

ploy

ees

cont

ribu

ting?

2-344


Elem

ents

for a

n O

pen

Sour

ce P

rogr

am?

Publ

ishe

d Po

licy

Ope

n So

urce

Pro

cess

Ow

ner

App

rova

l Pro

cess

esM

onito

ring

& T

rack

ing

Proc

ess

Obl

igat

ion

Veri

ficat

ion

Proc

ess

And

…

As

muc

h as

I’d

like

to s

ell y

ou m

y se

rvic

es, t

his

is

OPE

N S

OU

RCE,

so

chec

k ou

t ht

tp:/

/ww

w.li

nuxf

ound

atio

n.or

g/pr

ogra

ms/

lega

l/c

ompl

ianc

efo

r sa

mpl

e po

licie

s.

2-345


Be R

eady

to C

ompl

y w

ith th

e Le

tter

of

the

Requ

irem

ents

Free

Sof

twar

e Fo

unda

tion’

s co

mpl

ianc

e gu

ide

-ht

tp:/

/cop

ylef

t.or

g/gu

ide/

com

preh

ensi

ve-g

pl-

guid

epa2

.htm

l

–M

onito

r Sof

twar

e A

cqui

sitio

ns –

igno

ranc

e is

not

an

exc

use.

–Tr

ack

you

chan

ges

and

rele

ases

–yo

u ne

ed to

be

able

to p

rovi

de th

e ex

act c

ode

that

is s

hipp

ing.

–D

on’t

hav

e a

“Bui

ld G

uru”

–us

ers

need

to b

e ab

le

to s

ucce

ssfu

lly b

uild

you

r co

de. Y

ou n

eed

to

prov

ide

the

scri

pts

and

othe

r m

ater

ials

that

are

ne

cess

ary

to b

uild

and

inst

all.

2-346


Com

mon

Mis

take

s

Lega

lese

: mak

e it

unde

rsta

ndab

le

Spec

ific

polic

y th

at ig

nore

s ot

her

issu

es

Polic

y to

o st

rict

so

VOA

: Vio

late

d on

A

rriv

al

Doe

s no

t allo

w fo

r ed

ge c

ases

Doe

s no

t pro

vide

for

mod

ifica

tion

to

mee

t cha

nges

in b

usin

ess

mod

el/p

rodu

cts

2-347


Sum

mar

y

Trea

t the

man

agem

ent o

f ope

n so

urce

so

ftw

are

as a

n in

tegr

ated

, cro

ss-f

unct

iona

l bu

sine

sspr

oces

s

Esta

blis

h po

licie

s, d

efin

e th

e pr

oces

s an

d pr

oces

s ow

ners

Phas

e th

e de

ploy

men

t to

yiel

d ne

ar-t

erm

re

sults

Tech

nolo

gy p

latf

orm

s ca

n au

tom

ate

the

proc

ess,

enh

ance

cro

ss-f

unct

iona

l co

llabo

ratio

n an

d en

sure

val

idat

ion

2-348


Que

stio

ns?

2-349


NOTES

2-350


25

Cloud Computing Legal Issues

Peter J. Kinsella

Perkins Coie LLP

The information provided in this presentation does not necessarily reflect the opinions of Perkins Coie LLP, its clients or even the author.

If you find this article helpful, you can learn more about the subject by going to www.pli.edu to view the on demand program or segment for which it was written.

2-351


2-352


3

BIOGRAPHICAL INFORMATION

Pete Kinsella is a partner in Perkins Coie’s Technology, Transactions & Privacy practice. He advises clients on domestic and international licensing, technology and intellectual property matters and is a frequent lecturer on these topics. He has been repeatedly recognized for his legal excellence and was recently named, for the third time in the past four years as Best Lawyer’s “Denver Technology Lawyer of the Year.” Prior to joining Perkins Coie, Pete was a partner with Faegre & Benson and held various in-house legal positions with U S WEST (now CenturyLink) and Honeywell. Contact Information Peter J. Kinsella [email protected] 303-291-2300

2-353


2-354


5

1. WHAT IS CLOUD COMPUTING?

a. Although cloud computing has many definitions, generally, cloud computing is the delivery of shared resources or services via the internet. Typically, the resources that are used to provide the cloud computing services: i. are pooled; ii. can be rapidly adjusted; iii. are location independent; iv. are widely accessible; and, v. are paid for based on usage.

b. A variety of computing services and resources are available as cloud services, including: content (such as streaming audio, video or other information), storage, computing resources, and security threat detection.

c. In many applications, users access the cloud services by either using a web browser or a special application from their computer or portable device.

2. SIGNIFICANT FACTORS DRIVING THE GROWTH OF CLOUD COMPUTING

a. There are several factors driving the growth of cloud computing. i. Costs associated with maintaining a traditional internal data

center can be reduced by using cloud services, because the cloud resources are typically shared with other customers.

ii. Cloud services provide the ability to quickly increase or reduce resources to meet demand. This allows a customer to use computing power or storage, on an as needed basis, rather than having to permanently build out their own data center.

iii. Cloud services provide the ability to have a third party monitor and rapidly deploy security patches and other upgrades.

iv. Many small and medium sized businesses find that cloud service providers have more expertise than the business can inde-pendently hire.

2-355


6

3. DIFFERENT WAYS TO CATEGORIZE CLOUD COMPUTING SERVICES

a. Single Tenant vs. Shared Multi-Tenant i. Single Tenant Model

1. Resources may be administered on a customer by cus-tomer basis (e.g., patches could be applied as required by each customer)

2. Model may be more costly may present scalability issues ii. Shared Multi-Tenant

1. Application is comprised of a single integrated code base that is delivered to multiple customers (e.g., each customer gets the same thing, but different functions may be enabled or disabled)

2. May be more difficult to implement customizations on a customer by customer basis

b. CaaS vs. Saas vs. PaaS vs. IaaS i. Content as a Service (CaaS) - Delivers content to users

1. Examples: Amazon downloadable books; Wall Street Journal mobile application

ii. Software as a Service (SaaS) - Provides access to software over the internet, thereby eliminating the need to install and run the software application on the user’s machine 1. Examples: Google Apps, Gmail

iii. Platform as a Service (PaaS) - Delivers a platform (a cloud operating system) via the internet and allows “cloud applica-tions” to be built on top of it 1. Examples: Windows Azure

iv. Infrastructure as a Service (IaaS) - allows customers to rent underlying computer resources, such as servers, storage and firewall protection 1. Examples: Box, Dropbox, Amazon EC2

2-356


7

c. Private vs. Public Cloud Computing i. A public cloud infrastructure provides resources (such as com-

puter applications or storage services) that are shared between multiple unrelated customers.

ii. A private cloud infrastructure typically provides dedicated resources for a single organization. Those resources may be located at the organization’s facilities or from an external location.

iii. A community cloud infrastructure provides shared resources between several organizations from a specific community with common concerns (security, compliance, jurisdiction, etc.).

iv. A hybrid cloud has combined elements of private, community, or public cloud services.

4. FREQUENTLY RAISED ISSUES IN CLOUD SERVICE CONTRACTS

a. Enforceability of Clickwrap and Browsewrap. i. Courts apply traditional principles of contract law to assess

the enforceability of online agreements, focusing on whether the party challenging enforcement had reasonable notice of and manifested assent to the terms.1 Generally, courts differen-tiate online agreements between “clickwrap” agreements and “browsewrap” agreements. A clickwrap agreement appears on an internet webpage and requires that a customer agree to any terms or conditions by engaging in some affirmative act, such as by clicking on a check box on the screen, in order to proceed with the internet transaction. In contrast, a “browsewrap” agree-ment occurs where the website provides customers with the ability to view the terms of the agreement, such as through a hyperlink at the bottom of a web page, but does not otherwise require that the customers take any affirmative action to signify their assent to the agreement.

1. Vernon v. Qwest Commc’ns. Int’l , Inc., 857 F.Supp.2d 1135, 1149 (D. Colo. 2012);

Feldman v. Google, Inc., 513 F. Supp. 2d 229, 236 (E.D. Pa. 2007); Barnett v. Network Solutions, Inc., 38 S.W.3d 200, 203-04 (Tex.App. 2001, pet. denied).

2-357


8

ii. Courts routinely enforce clickwrap agreements because notice and assent are more easily established.2 In contrast, the enforce-ability of browsewrap agreements involves a more fact-sensitive inquiry in which courts determine whether the customer has “actual or constructive knowledge” of the contract prior to being bound.3 Actual knowledge is most often obtained through a defendant’s admission of knowledge of the site terms or through the presence of a cease and desist letter that advises the defend-ant of the existence of such terms.4 Alternatively, constructive knowledge is typically found where reasonable notice of the terms is provided such that the court can impute knowledge of their existence to the customer.5 Courts have found notice to be sufficient to impute knowledge where a website provided prominent notice of the hyperlinked terms with easy access to the full agreement.6 In contrast, courts have held browsewrap

2. See U.S. v. Drew, 259 F.R.D. 449, 462 n. 22 (C.D. Cal. 2009); see also Peters v.

Amazon Services LLC, NO. C13–480MJP, 2013 WL 7872692 (W.D. Wash. Nov. 5, 2013) (enforcing agreement where plaintiff clicked a box indicating he had read and agreed to the “Agreement;” the underlined word “Agreement” included a hyperlink to the relevant terms.); Kwan v. Clearwire Corp., NO. C09-1392JLR, 2012 WL 32380 (W.D. Wash. Jan. 3, 2012); (assuming that if plaintiff had clicked the “I accept terms” button on defendant’s website prior to accessing the internet with her modem that she would have been bound by the Terms of Service); Doe v. Project Fair Bid Inc., No. C11–809 MJP, 2011 WL 3516073, (W.D. Wash., Aug. 11, 2011); Vernon v. Qwest Commc’ns Int’l, Inc., 925 F.Supp. 2d 1185, 1191 (D.Colo. 2013) (“clickwrap agreements are increasingly common and ‘have routinely been upheld’) (quoting Smallwood v. NCsoft Corp., 730 F.Supp.2d 1213, 1226 (D.Haw. 2010); Fieldtech Avionics & Instruments v. Component Control.Com, Inc., 262 S.W.3d 813, 818 n.1 (Tex.App. 2008) (“Texas courts recognize the validity of clickwrap agreements.”) (citing RealPage, Inc. v. EPS, Inc., 560 F. Supp. 2d 539, 545 (E.D. Tex. 2007)).

3. See Southwest Airlines Co. v. BoardFirst, LLC, 2007 WL 4823761, at *5 (N.D. Tex. Sept.12, 2007).

4. See id. 5. Snap-on Bus. Solutions, Inc. v. O’Neil & Assoc., 708 F. Supp. 2d 669, 681 (N.D.

Ohio 2010). 6. See, e.g., Register.com, Inc. v. Verio, Inc., 356 F.3d 393 (2d Cir. 2004) (imputing

knowledge of web site’s terms of use to repeated user of Register.com’s database); Major v. McCallister, 302 S.W.3d 227 (Mo. Ct. App. 2009) (upholding browsewrap agreement where each web page contained “immediately visible notice of existence of license terms” and hyperlink to those terms); Southwest Airlines Co. v. BoardFirst, L.L.C., 2007 WL 4823761 (N.D. Tex. 2007) (holding that the defendant had knowledge of and therefore was bound by Southwest’s website Terms and Conditions of Use at least as of the time it was sent a cease and desist letter); Hotels.com, L.P. v. Canales, 195 S.W.3d 147, 154-56 (Tex. App. 2006) (holding that notice of hyperlinked terms

2-358


9

agreements unenforceable where customers were required to scroll down below the fold (i.e., to a secondary or submerged screen) to see the hyperlinked notice, an action which was not necessary to complete their transaction.7

b. Authority to Bind i. Generally, an agent can bind his principal when the agent has

either actual or apparent authority or if the principal ratifies the agent’s agreement.8 Actual authority may be express or implied, and is triggered by the principal’s objective manifestations to the agent. 9With apparent authority, the manifestations are made to a third person, and must be made by the principal rather than the purported agent.10 The principal’s manifestations will support a finding of apparent authority only if (1) they cause the one claiming apparent authority to actually or subjectively believe that the purported agent has authority to act for the principal and (2) the claimant’s actual, subjective belief is objec-tively reasonable.11 Such objective manifestations to third parties do not necessarily need to come directly from the principal, but rather can also arise “from authorized statements of the agent.”12 Whether apparent authority exists is normally a question of fact.13 A principal ratifies an agent’s agreement if the principal,

immediately above an “I agree” button next to a click box may be sufficient notice and manifestation of assent).

7. Specht v. Netscape, 306 F.3d 17 (2d Cir. 2002); Hines v. Overstock, 668 F. Supp. 2d 362, 367 (E.D.N.Y. 2009), aff’d, 2010 WL 2203030 (2d Cir. June 3, 2010) (slip copy); In re Zappos.com, Inc., Customer Data Sec. Breach Litig., No. 12-325, 2012 WL 4466660 (D. Nev. Sep. 27, 2012).

8. See King v. Riveland, 125 Wn. 2d 500, 507 (1994); Hoglund v. Meeks, 139 Wn. App. 854 (2007). Colorado and Texas courts’ jurisprudence on apparent authority and principals’ ratifications of agents’ agreements generally mirror Washington decisions on the subject; therefore, Colorado and Texas’ case law is not specifically addressed in this section. See Carl’s Italian Restaurant v. Trucks Ins. Exchange, 183 P.3d 636, 640-41 (Colo. App. 2007); Gaines v. Kelly, 235 S.W.3d 179, 182-83 (Tex. 2007).

9. Carl’s Italian Restaurant, 183 P.3d at 640-41; Gaines, S.W.3d at 182-83; King v. Riveland, 125 Wn. 2d at 507.

10. Carl’s Italian Restaurant, 183 P.3d at 640-41; Gaines, S.W.3d at 182-83; Hansen v. Horn Rapids O.R.V. Park of the City of Richland, 85 Wn. App. 424, 430 (1997).

11. Hansen, 85 Wn. App. At 430. 12. Smith v. Hansen, Hansen, & Johnson, Inc., 63 Wn. App. 355, 365 (1991). 13. Id. at 362; see also Hartman v. United Bank Card, Inc., No. C11–1753JLR, 2012

WL 4758052 (W.D. Wash. Oct. 4, 2012) (denying defendant’s motion for summary judgment regarding issue of apparent authority despite lack of direct communi-cations between principal and third party).

2-359


10

with full knowledge of the facts: (1) receives, accepts, and retains benefits from the contract; (2) remains silent or fails to repudiate the contract; or (3) otherwise exhibits conduct demon-strating adoption and recognition of the contract.14

ii. Courts generally will apply these same agency contract law principles when evaluating authority to bind in the context of online agreements. For instance, a Massachusetts District Court held that there was no apparent agency as a matter of law where the only relevant conduct by defendant was that it issued the purported agent an e-mail address with the defendant’s corporate domain name.15 In denying the plaintiff’s claim of apparent agency in this context, the court cited opinions finding that giving someone a business card with the company name or logo, access to a company car, or company stationery, by them-selves, did not create sufficient indicia of apparent authority.16 Similarly, a Tenth Circuit Court refused to infer that a corpo-ration’s ownership of an IP address used in connection with an online purchase was sufficient to establish that the individual who agreed to the user agreement from that IP address had authority to bind the corporation.17 Finally, where a plaintiff company expressly notified both its employees and the defendant that only three executives were authorized to bind the plaintiff to an online agreement, the court held that unauthorized employees had no actual or apparent authority to bind the plaintiff when they used defendant’s website and agreed to defendant’s online agreements.18

c. Goods vs. Services laws i. Many cloud service contracts have evolved from a software

licensing model that in the past were governed by the Uniform Commercial Code (UCC) Article 2. While UCC obligations may be triggered by the delivery of software applications that are used to access the cloud services, generally the UCC doesn’t apply to a pure services contract. This can lead to questions concerning the enforceability of various exculpatory clauses,

14. Barnes v. Treece, 15 Wn. App. 437, 443 (1976). 15. CSX Transp., Inc. v. Recovery Express, Inc., 415 F. Supp. 2d 6 (D. Mass. 2006). 16. Id. 17. Health Grades, Inc. v. Decatur Memorial Hosp., 190 Fed. Appx. 586 (10th Cir. 2006). 18. National Auto Lenders, Inc. v. SysLOCATE, Inc., 433 Fed. Appx. 842, 843 (11th

Cir. 2011).

2-360


11

since most case law concerning the interpretation of such clauses arises under the UCC rather than the common law.

ii. Using a traditional license grant clause in a cloud services contract may cause confusion, because it may grant a user rights in the underlying software used to provide the service (i.e., the cloud provider’s software infrastructure) rather than a right to obtain the services provided by the software. Therefore, many cloud service contracts are drafted in the form of a service contract rather than as a license. 1. Compare:

a. Provider hereby grants customer a non-exclusive right to use the software/services

b. Provider will use commercially reasonable efforts to provide access to the services set forth in Exhibit A.

d. Ownership of Custom Developments i. Shared Multi-Tenant – it is difficult for the vendor to convey IP

ownership of any service feature, because all customers must use the same service 1. This is the tradeoff for obtaining the efficiency of using a

cloud service model ii. Single Tenant - customer ownership of improvements is at least

possible, as the customer is able to use a personalized instance of the software

e. Pricing/Payment i. Many service providers will seek annual payment in advance

(may need to address refund issues for certain breaches and termination issues)

ii. Pay for use - How is “use” determined? 1. Actual use / number of users/ number of employees

iii. Price Changes 1. How frequently can the vendor change pricing? 2. Are there any limits on the amount that prices can increase?

2-361


12

iv. Does the customer have any rights to obtain prices lower? (e.g., benchmarking right, and obligation on provider to match benchmark price)

v. MFN ? f. Services Description

i. A services description protects both the customer and the provider so that each party understands what services will be provided (and what services will not be provided)

ii. Common items that are included in the services description: technical specifications; published materials; FAQs; and, bug and technical reports

g. Service Evolution i. The contract should specify the process to changing the service ii. Can the customer refuse or delay a change?

1. Changes are often deployed simultaneously to all users in a shared multi-tenant architecture.

iii. What is the process for changing the platform, operating system or application?

iv. Notification? v. How does pricing work? vi. Is the data accessible by the customer for other purposes?

h. Service Levels i. How are service metrics defined? Does the entire service have

to be unavailable or only particular portions of the service? ii. How are service metrics reported?

1. Does the customer have to request reports or will the reports be automatically delivered?

2. Does the customer need to complain in order to receive the credit or is the credit applied automatically?

iii. Does the customer need to have access to any vendor tools? 1. Does the vendor have the necessary rights to allow cus-

tomers to use the tools?

2-362


13

iv. Does the customer need to report a service issue to obtain a service credit or will a credit be automatically generated?

v. What is the process for strengthening service metrics over time?

vi. Are service credits the sole and exclusive remedy arising from a performance breach? 1. Frequently, vendors will provide service credits as the

sole and exclusive remedy for issues concerning the service. vii. Vendors often want to reserve the right to “immediately” suspend

the service in the event of an “emergency” issue. However, the standard for what constitutes an emergency may not be clearly defined other than an event that has or could have the potential of causing a material disruption in service or potential risk to data integrity.

viii. Service Levels Agreements typically have two components: 1. A service component - defines how the services will be

provided. Common SLA service components include: a. Identification of the services that are to be provided b. May identify the services that are not provided c. Identification of assumptions underlying service

availability d. Establishment of service standards (e.g., the

timeframes in which services will be provided) e. Definition of the responsibilities of both parties

2. A management component - defines the management pro-cedures for tracking the delivery and modification of the services. Common SLA management components include procedures for: a. Tracking the availability of the services b. Reporting service issues c. Resolving service issues d. Revising services or service metrics

2-363


14

i. End User Conduct i. Cloud service provider contracts often require that customers

“ensure” that their end users comply with the vendor’s terms of service. Many sophisticated customers will attempt to soften this requirement. For example, a customer may only want to undertake an obligation to use “commercially reasonable efforts” to cause its users to comply with the terms of service, or simply “inform” its users of the obligations. Other customers may want the vendor to directly contract with the end users.

ii. Vendor terms of service typically prohibit the customer and its end users from engaging in inappropriate activities or using the services to store or process inappropriate content (which activities and content may, or may not be, identified in further detail).

iii. Vendor contracts may require the customer to notify the vendor in the event the customer terms of service are breached.

iv. Vendor contracts typically allow the vendor to suspend or terminate the customer or its users in the event the terms of service are breached, and require the customer to indemnify the vendor against any third party claims arising from the breach. Customers will often try to limit the suspension to: (1) material violations or violations that significantly threaten the security or integrity of the cloud service; and, (2) those end users that actually caused the breach (rather than the customer itself). Customers will also request advance notification of any suspension.

v. Cloud vendor agreements may incorporate by reference addi-tional terms and policies posted to the vendor’s website, such as policies addressing privacy practices and end user obligations concerning the use of the service, which are typically are subject to the vendor’s unilateral amendment. Customers will frequently attempt to require the vendor to provide direct notice in advance of the effective date of any amendments to incorporated terms, along with the right to terminate if such amendments are materially detrimental to the customer’s interests.

j. Termination and Transition i. Every contract will end at some time

1. It is important to plan for termination issues prior to contract execution

2-364


15

ii. Contract should address 1. Duration of termination services 2. Payment for post-termination services 3. Transition assistance including data migration

a. Format of data? b. It may not be easy to copy or download the data

k. Disaster Recovery and Mitigation i. Does the service provider:

1. have a business continuity plan? 2. provide redundant operations from different sites? 3. routinely test its back-up capability? 4. routinely attempt to restore data?

ii. Contract may require the service provider: 1. to have a data/computing back-up plan 2. to routinely test its back-up capability 3. to store back-up on servers located at a separate location 4. to provide redundant operations from different sites 5. Consider the impact of bankruptcy on the ability to

access data and the ownership of back-up media iii. Disaster Recovery

1. What events cause the service provider to engage in data recovery operations?

2. Does the contract contain data recovery goals? 3. What are the consequences if the data is not recovered

within the specified time frames? 4. Who takes priority if multiple customers of the service

provider are affected? 5. How will a force majeure event impact contractual

obligations? l. “Force Majeure” Events

i. Parties can bargain for effects of “FME”

2-365


16

ii. Consider scope and wording (what is/is not considered FME) iii. What form of relief is granted (excused from performance,

suspension of performance, termination, etc.)? iv. Does the FME clause override disaster recovery and service

level credits? v. What are the disaster recovery obligations during an FME?

1. Are some customers contractually prioritized? m. Data Protection Laws

i. Data protection and privacy laws should be considered when evaluating a cloud services offering. Different laws may be implicated depending on the nature of the content that is being stored or processed by vendor or the location where the data originates or is processed. Generally, cloud service providers will attempt to shift some or all of the compliance obligations to the end users, because the cloud service provider may be unaware of the actual content being processed or stored in its services. Depending on the circumstances, some of these laws may impose specific security requirements and, may require the imposition of various obligations on subcontractors. Some frequently implicated laws include: 1. Export Administration Regulations (EAR) / International

Traffic in Arms Regulations (ITAR) prohibit the unlicensed “export” of information to foreign nationals and to certain prohibited persons for national security reasons or protection of trade. These laws can be triggered if the employee of the provider has foreign nationals who can access the stored data.

2. Health Insurance Portability and Accountability Act (“HIPAA”) 42 U.S.C. § 1320a imposes various technical requirements on the storage of protected health information. a. Health Information Technology for Economic and

Clinical Health (HITECH) Act. Contains incentives related to development of health care information technology and adoption of electronic health record systems. This Act also widens the scope of privacy and security obligations imposed on service providers

2-366


17

(including their subcontractors) that process or store information.

3. Family Educational Rights and Privacy Act (“FERPA”) 20 U.S.C. § 1232g; 34 CFR Part 99 protects the privacy of student education records. Many universities take the position that any education information, including student information databases and faculty and staff email con-stitutes “education records” for purposes of FERPA and therefore may be outsourced only to vendors that have been designated, and are willing to accept obligations associated with being a “school official” with “legitimate educational interests” in the data under FERPA.

4. Sarbanes-Oxley Pub. L. No. 107-204, 116 Stat. 745 (2002) (codified as amended in scattered sections of 11, 15, 18, 28 and 29 U.S.C.). imposes various controls over how financial information is stored, retained, altered and monitored.

5. Gramm-Leach-Bliley 15 U.S.C. §§ 6801 et. seq. addresses the treatment of personal data in banking and insurance industries.

6. Children’s Online Privacy Protection Act (COPPA) – 15 U.S.C. §§ 6501- 06. Address the collection and use of information from children.

7. Patchwork of evolving state laws. Many states impose data security requirements on entities operating in a state or who process data for its residents. For example, Massachusetts has enacted the “Massachusetts Standards for the Protection of Personal Information of Residents of the Commonwealth” that requires all individuals, corpo-rations, associations, partnerships and other legal entities (regardless of where they are located) that own, license, store or maintain personal information about a Massachu-setts resident to develop, implement, maintain and monitor a comprehensive, written information security program applicable to such information.

ii. EU Data Protection Act prohibits export of personally iden-tifiable information from EU to countries that have inferior (as viewed from an EU perspective) data protection laws.

2-367


18

1. Rule: Data must not be transferred to countries outside the EU that do not offer an “adequate level of protection” a. Currently only: Andora, Argentina, Canada, Faroe

Islands, Guernsey, Isle of Man, Israel, Jersey, New Zealand, Switzerland, Uruguay

b. Exceptions: i. ask permission from every “data subject”

involved ii. US/EU Privacy Shield Adopted by European

Commission on July 12, 2016 (US Companies can certify compliance August 1, 2016)

iii. EU model contract clauses iv. “Binding Corporate Rules”

2. From a cloud perspective, EU data protection law will apply when a “controller” is located in its territory; or, when a “controller” outside the EU uses “equipment” within the EU territory. When applied to cloud computing, EU law can be triggered when using an EU-based data center. Many authorities interpret “equipment” in an extremely broad way (e.g., browser cookies).

iii. Sophisticated customers will often want to review a service provider’s internal security and control policies, audit security and control procedures and impose contractual obligations on the service provider to ensure that the service provider is in compliance and remains in compliance with the applicable laws. Many cloud service providers may have difficulty imposing contractual obligations on their subcontractors. For example, cloud service providers will often subcontract with very large data storage providers (such as Amazon) to provide underlying storage or computing resources.

iv. Note: Some vendors will attempt to minimize the impact of various laws by: (i) refusing to comply with laws that are triggered by specific content; (ii) providing each customer with encryption tools that do not allow the vendor to access the customer data; and (iii) requiring the customer to warrant that it is legally permitted to have the vendor process the information provided by the customer.

2-368


19

n. Data Issues- i. It is important to

1. define “data” (e.g., does the definition cover only infor-mation that is stored by customer, or does it including information that is created or collected by the cloud service provider in the course of providing the services)

2. specify ownership rights in the data 3. specify purposes for which the data may be used 4. identify the obligations of the parties to comply with data

and privacy laws ii. Will the vendor be permitted to use the data (or subsets of the

data) for other purposes? o. Subcontracting

i. Does the service provider use subcontractors? ii. Can the service provider impose contractual obligations on the

subcontractors? iii. Does the customer have a right to approve new subcontractors?

(or a category of subcontractors, such as those that have access to that data in either encrypted or unencrypted form?)

iv. What does the approval/disapproval process look like? v. Should the customer have a subcontractor termination right

rather than an approval right? p. Data Center Issues

i. Location - Some cloud provider contracts expressly reserve the right to store customer data in any country in which the provider does business. While dispersed geographical storage may be beneficial from a data back-up perspective, it can raise security issues.

ii. What are the characteristics of the data center? 1. Security? 2. Redundant telecommunications, power, and cooling?

iii. How is data backed-up? On-site? Off-site? How is off-site data protected?

2-369


20

iv. Where is the data stored? v. Is the data and back-up data encrypted?

q. Security i. Cloud service providers may offer to provide “commercially

reasonable” security for data. In some instances, contracts may also offer to adhere to “industry standard” security practices, without specifying the specific standard. For some customers, it may be beneficial to specify an actual, specific security requirement (e.g., data subject to HIPAA, Gramm-Leach-Bliley, PCI DSS, or the Massachusetts Standards for the Protection of Personal Information of Residents of the Commonwealth) or industry standard (e.g., ISO 27001) that must be followed.

ii. Customers may want to consider the following factors when evaluating the cloud provider’s security: 1. What physical security measures does the vendor use to

protect the underlying data centers? Can third parties access the data centers?

2. Is the customer data encrypted in transit and at rest? 3. Does the provider hold the decryption keys or are the

keys held only by the customer? If the provider holds the keys, how are the keys protected?

4. Will foreign nationals be able to access the data or decryption keys? If so, this may create export control issues.

5. Who has access to: facilities, infrastructure, platforms, applications, and data?

6. Does the cloud service provider perform background checks on employees who have access to encrypted or unencrypted customer data?

7. Will dedicated equipment, shared equipment or some combination be used to store or process the data?

8. Does the vendor use access controls to prevent unau-thorized access to facilities and stored data?

2-370


21

9. Does the vendor regularly perform security audits and penetration testing? Is the vendor under a contractual obligation to take any action if the security audit reveals a deficiency?

r. Security Events i. In more complex agreements, it may be import to distinguish

between an actual security breach (“Security Incidents”) and a vulnerability (“Security Issues”) and provide different rights, obligations and remedies for each category of issues. 1. Security Issues – are issues with the system that could

give rise to a security breach a. How are security issues defined? b. objective vs. subjective definition c. Are issues in the vendor’s control and those in the

control of its subcontractors differentiated? d. Does every problem need to be investigated? e. Does every problem need to be fixed? f. What is the process for fixing the issue? g. Is there a specified time frame? h. How is the time frame adjusted for fixes that take

longer to implement? 2. Security Incidents – are breaches of security

a. Notice requirement to other party or to end users? b. Remediation efforts? c. Who does what? d. Who pays for remediation efforts? e. Does the breach require end-user notification? f. Who has legal liability for the incident? g. May want to address liability caused by third parties

(e.g., hackers) s. Confidentiality Clauses

i. May impose a back door security obligation on the service provider

2-371


22

ii. Is the service provider obligated to keep a customer’s infor-mation “confidential”?

iii. Some providers will state that they will employ “commercially reasonable efforts” to “protect” a customer’s confidential information

t. Subpoenas/E-Discovery i. Customers and vendors of cloud services can be compelled to

produce data under several mechanisms. It is important to note that in some circumstances, certain categories of vendors are not allowed to voluntarily disclose information to the government. 1. Warrants and Subpoenas

a. U.S. Law - Fourth Amendment - “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and sei-zures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons of things to be searched.”

2. Electronic Communications Privacy Act (ECPA) a. The Wiretap Act b. Stored Communications Act c. The Pen register/Trap & Trace Act

3. Patriot Act (including National Security letters and FISA Warrants)

ii. Typically vendors will: 1. Try to shift costs and obligations of responding to the

client 2. Expressly reserve the right to disclose information as

required by law u. Data Retention

i. Customers may want two conflicting obligations: 1. Vendor should keep the data as long as customer needs it

2-372


23

2. Vendor should promptly destroy it when it is no longer needed

ii. Depending on the service, vendor may not know the content of the data and will be unable to assess legal retention requirements

iii. Contract should specify when data is destroyed v. Compliance Requirements

i. Customer may want the contract to contain procedures for auditing compliance issues: 1. Does the vendor data center facility allow visitors? 2. Will the audit disclose too much security information? 3. Will a customer’s auditor have access to other customers’

data? ii. Customer may want to impose compliance obligations on the

vendor w. Risk Mitigation

i. Typically, the customer wants to impose a combination of the following obligations on the service provider: 1. Operating procedures 2. Warranties 3. Indemnities

a. Provider contracts rarely include any form of indem-nification, but customers frequently ask for such protections in connection with third party intellectual property infringement and inappropriate disclosure or data breach. If the provider provides an indemnity, such obligation will typically cover: i. Defense and payment finally awarded judgment ii. It will want to exclude combinations created

by the customer and data issues arising from the specific data content

4. Software Escrows a. Typically, software escrows have little value in many

cloud service arrangements, because the customer

2-373


24

will not have the equipment/data center infrastructure to actually utilize the escrow

5. Service Escrows: Situation may be different if service is an “app” running on commercial third party platform

6. Data Escrows? a. Data stored with a third party that can be accessed

separately by customer 7. Insurance

a. Contract may require a party to carry certain levels of insurance

b. CGL policy may not be enough to cover many cyber liability issues

c. Cyber liability policy may have lower limits for certain categories of damages (e.g., breach notifi-cation, credit reporting services)

d. Requires consultation with broker/agent x. Warranty Disclaimers

i. In some jurisdictions, warranty disclaimers must be explicitly negotiated or bargained for.19 It is unclear what constitutes adequate negotiation in the commercial context. Cases frequently note that the parties did not discuss the disclaimer term— suggesting a high bar for negotiation—but involve distinguish-able factual scenarios where the disclaimer was first presented in a post-sale invoice.20 Consumer cases applying the nego-tiation rule vary; some suggest that knowledge and under-standing of the term is sufficient, while others insist that actual

19. W. Rec. Vehicles, Inc. v. Swift Adhesives, Inc., 23 F.3d 1547, 1554 (9th Cir. 1994)

(applying Washington law). Note: a second requirement—that the provision state with particularity the qualities being disclaimed—does not apply in commercial trans-actions, because the statute requires particularity only for consumer transactions. Wash. Rev. Code § 62A.2-316(4); Hartwig Farms, Inc. v. Pac. Gamble Robinson Co., 28 Wn. App. 539, 542, n.5 (1981); United Van Lines, 710 F. Supp. at 286.

20. See W. Rec. Vehicles, 23 F.3d at 1554; Hartwig Farms, 28 Wn. App. at 543 (1981); Rottinghaus, 35 Wn. App. at 103; Riverview Sch. Dist. No. 407 v. Loadmaster Sys., Inc., 113 Wn. App. 1023, at *3 (2002) (unpublished opinion).

2-374


25

knowledge of the term is not sufficient if the negotiation does not address the terms of the disclaimer and possible defects.21

ii. Other jurisdictions allow a seller to disclaim warranties.22 For example, in Texas, to exclude the implied warranty of mer-chantability, the contract “must mention merchantability and in case of a writing must be conspicuous[.]”23 In Colorado, implied warranties may be excluded “by a conspicuous writing which states generally that there are no warranties extending beyond the description in the contract.”24

iii. To be conspicuous, a warranty exclusion must reasonably give notice to the person against whom it will operate.25 For example, Texas courts determining conspicuousness consider capitalization, prominent placement,26 setoff from surrounding text, and larger or contrasting type or font.27 Courts are more likely to find a disclaimer conspicuous when the transaction is between commercial entities.28

y. Limitation of Liability i. Three Categories of Damages

1. Direct damages (basic measure of damages) a. Difference between what was promised and what

was delivered – service providers will often want to limit their damages to direct damages

21. Compare Newkirk v. McMullen, 123 Wn. App. 1046, at *3 (2004) (unpublished

opinion) and Miller v. Badgley, 51 Wn. App. 285, 293-94 (1988). In any event, signing a document that contains the term is not necessarily sufficient. See Babb v. Regal Marine Indus., Inc., No. 43934-4-II, 2014 WL 690154 (Wash. App. Div. 2, Feb. 20, 2014) (not published) (disclaimer held invalid, because although consumer signed contract, he did not sign on line next to disclaimer provision).

22. Tex. Bus. & Com. Code § 2.316(b). 23. Id. 24. O’Neill v. Int’l Harvester Co., 575 P.2d 862, 865 (Colo. Ct. App. 1978); see also

Colo. Rev. Stat. § 4-2-316(2). 25. Arkwright-Boston Manufacturers Mut. Ins. Co. v. Westinghouse Elec. Corp., 844

F.2d 1174, 1183 (applying Texas law and citation omitted). 26. See id. at 1183-85. 27. Omni USA, Inc. v Parker-Hannifin Corp., 964 F. Supp. 2d 805, 815 (S.D. Tex.

2013) (applying Texas law). 28. See id.

2-375


26

2. Incidental damages a. Costs directly associated with obtaining replacement

goods or services 3. Consequential damages

a. Lost profits b. Unauthorized disclosure of data will often result in

consequential damages (and direct damages too) 4. Issues to consider:

a. Caps on the “type” of damages b. Direct vs. Consequential vs. Incidental c. Caps on the “amount” of damages d. Exceptions to the one or both of the caps?

i. Indemnification ii. Security Breach

z. Exclusionary Clauses i. The enforceability of exclusionary clauses (which include both

remedy limitations and disclaimers of liability) can vary widely from jurisdiction to jurisdiction.29 In most jurisdictions, they are largely enforceable under unless unconscionable. For example, under Washington law, “Exclusionary clauses in purely commercial transactions ... are prima facie conscionable and the burden of establishing unconscionability is on the party attacking it.”30 When the party seeking to avoid the limitation argues that it should be not be enforced, the court first consid-ers where there are any “indicia of unfair surprise.” That is, was the buyer advised of the limitation term, was the contract short and clear, and was this an arm’s length transaction among competent parties. Compare this to Colorado, which also allows

29. The specific factors and procedure varies widely, based on jurisdiction. Compare,

Lincoln General Ins. Co. v. Bailey, 224 P.3d 336, 341 (Colo. App. 2009) (citing Davis v. M.L.G. Corp., 712 P.2d 985, 991 (Colo.1986); Delfingen U.S.-Tex., L.P. v. Valenzuela, 407 S.W.3d 791, 797-98 (Tex.App. 2013); Zuver v. Airtouch Com-munications, Inc., 153 Wn. 2d 293, 304 (2004); NEC Techs., Inc. v. Nelson, 478 S.E.2d 769, 771 (Ga. 1996); American Nursery Products, Inc. v. Indian Wells Orchards, 797 P.2d 477 (Wn. 1990).

30. Am. Nursery Prods., 115 Wn. 2d at 222.

2-376


27

general disclaimers of tort liability for the manufacture and sale of products.31 But, it disfavors such disclaimers, however, and requires that they be “specifically agreed to in negotiations between a commercial seller and commercial buyer.”32

ii. Courts may sometime not enforce limits on remedies if the only available remedy fails of its essential purpose. The doctrine is driven generally by concern that contracts should provide at least a fair quantum of remedy for breach of the contract. Many jurisdictions apply two-part test: (1) identify essential purpose of limited remedy; and, (2) identify whether or not limited remedy in fact failed to meet such essential purpose

iii. Cases are mixed as to whether the failure of Essential Purpose Doctrine applies to pure services agreements. 1. Cases declining to apply failure of essential purposes

doctrine in a services context a. Pichey v. Ameritech Interactive Media Services,

Inc., 421 F. Supp. 2d 1038 (W.D. Mich. 2006) (“Under Michigan law, the failure-of-the-essential- purpose doctrine applies only to matters falling under Article 2 of the Uniform Commercial Code (“UCC”), Article 2 of the UCC, however, applies only to transactions in goods, not transactions for services. … [T]he doctrine of unconscionability more properly provides the vehicle for determining whether the terms of a services contract are sufficiently one-sided as to undermine the purpose of the agreement.”)

b. Wells v. 10-X Manufacturing Company, 609 F.2d 248 (6th Cir. 1979). (“Article 2 of the Code is intended to have broad application. However, it also follows from the Code’s continued focus on ‘goods,’ the definition of which is cast in terms of a ‘contract for sale,’ that a contract which calls merely for the rendition of services is not subject to the sales provisions of the Code.”)

31. United States Aviation Underwriters, Inc. v. Pilatus Bus. Aircraft, Ltd., 358 F.

Supp. 2d 1021, 1024 (D. Colo. 2005) (applying Colorado law); accord Lease Finance, Inc. v. Burger, 572 P.2d 857, 861 (Colo. Ct. App. 1978).

32. United States Aviation Underwriters, 358 F. Supp. 2d at 1024 (citation omitted).

2-377


28

c. San Francisco Bay Area Rapid Transit v. GE Trans-portation Systems Global Signaling, LLC, 2010 WL 2179769 (N.D. Cal. 2010). (“There simply is no parallel provision in the common law as applied to services contracts and although ‘courts are free to reason by analogy to [the U.C.C.],’ the only other court addressing this particular issue has held that the U.C.C. cases do not apply directly to the limi-tation of liabilities clauses of a services contract.”)

2. Cases that apply the failure of essential purpose doctrine to a services agreement a. Jacada (Europe), Ltd. v. International Marketing

Strategies, Inc., 2004 WL 24267645 (W.D. Mich. 2003) (Court upheld the arbitration award, reasoning that, “the case law does not strictly limit the appli-cation of ‘the failure of an essential purpose’ to cases involving the sale of goods.”)

b. NetworkTwo Communications Group, Inc. v. Spring Valley Marketing Group and CommunityISP, Inc., 2003 WL 1119763 (E.D. Mich. 2003) (Court upheld its earlier ruling that “the damage limitation provi-sions [of the agreement did] not fail of their essen-tial purpose and render the damages . . . illusory” in connection with an internet services contract)

c. Adcock v. Ramtreat Metal Technology, Inc., 105 Wash. Ct. App. 1058 (2001).

2-378


NOTES

2-379


NOTES

2-380

Documents

Advanced Licensing Agreements 2017 - Practising Law …download.pli.edu/WebContent/chbs/185480/185480_Chapter25_Adv... · Advanced Licensing Agreements 2017 Volume Two INTELLECTUAL