Negotiating indemnity clauses

Double_indemnityContractual indemnities are commonly sought in IT and software development / licensing contracts. While they are a relatively straightforward concept, they should should be carefully considered.

I have written an article on this issue here, covering key legal issues:

  • Indemnities vs warranties;
  • Types of indemnities;
  • When indemnities are appropriate;
  • Limiting indemnities; and
  • Key issues for negotiating an indemnity clause.

Of course, negotiations on indemnities will often be strongly influenced by bargaining power and positions, but it is always important (and useful in negotiations) to have properly assessed the legal/liability issues first.

Full article: Negotiating indemnity clauses

Assumed liability – an insurance issue for IT firms

assumeIt’s a good idea for software developers and other IT firms (or any professional services business) to have professional indemnity (“PI”) insurance. This insurance can provide cover and other assistance in the event of a customer claim.

However, it’s important to understand how your PI policy works. One important issue is that PI policies often exclude cover for what is known as “assumed liability”. This is essentially where you voluntary assume additional risk beyond what the law would normally impose, which is something that we occasionally see in commercial contracts. Beyond the general risks or assuming a higher level of liability, It is important to consider any potential insurance implications.

I have written an article on this issue here.

Clients naturally want “the best” from their service providers. However, service providers and other suppliers who agree to provide “the best” – or any standard or duty higher than usual – should be aware of the possible implications this may have on their insurance cover.

Full article: Exclusions for assumed liability

Using GPL code in your software

I’ve written an article on using GPL code in your software, covering “the essentials” on:

  • The GPL (GNU General Public License) and LGPL (Lesser GPL)   *US spelling…
  • Challenges of interpreting the GPL
  • Key legal issues when incorporating GPL-licensed code in proprietary programs
  • Issues and consequences arising from GPL violations.

The article doesn’t cover other open source licences. While GPL is the most well-known open source licence, an interesting issue is the apparent (let’s say alleged) trend away from copyleft open source licences (such as the GPL) towards permissive open source licences such as the Apache, MIT and BSD licences.

Whatever licence is used on a third-party components of your software, it is important from a legal and commercial perspective to ensure that you understand the implications. As outlined in my article, consequences of a GPL (or other) licence breach can include:

  • Liability to the licensor or an injunction;
  • Problems arising from IP audits or due diligence projects, which could have significant implications for a proposed business/asset sale, valuation, joint-venture or merger;
  • Breaches of IP warranties or other contractual obligations to end-users; and
  • Potential conflicts with end-user procurement policies (i.e. policies stating that all suppliers must fully comply with licensing requirements)

eDiscovery in a small matter

Here are slides from my presentation at Law Tech NZ 2015 held in Auckland on 18 March 2015.  My presentation was on eDiscovery in a small matter, and included some statistics from LawFlow. The term “small matter” is perhaps something of a red-herring, as the High Court Rules and principles for discovery are the same for all cases big and small (subject to orders). But for practical reasons including the all-important touchstone of proportionality, small discoveries often require a more tightly-focused, pragmatic approach.

Universal support for exclusion of software patents

Yesterday the Government announced a final amendment to the Patents Bill intended to clarify that software is not patentable. This now looks set to be supported by all political parties, meaning that Parliament will unanimously vote to ban software patents.

I have written about the new amendment on the Institute of IT Professionals website. Here’s some other, so-far universally positive, reactions.

Commerce Minister Craig Foss, announcing the amendment:

These changes ensure the Bill is consistent with the intention of the Commerce Select Committee recommendation that computer programs should not be patentable.

Labour IT spokeswoman Clare Curran:

This is a victory for our industry, which is worth around 11% of our GDP.

Institute of IT Professionals (NZ’s largest IT representative body):

The Institute of IT Professionals, New Zealand’s largest IT representative body, strongly supports the Government’s announcement today clarifying that software will not be patentable in New Zealand, removing a major barrier to software-led innovation.

Ian McCrae, CEO of Orion Health – New Zealand’s largest software exporter:

We welcome this announcement… In general, software patents are counter-productive, often used obstructively and get in the way of innovation.

John Ascroft, CIO of leading NZ software company Jade Corporation:

We believe the patent process is onerous, not suited to the software industry, and challenges our investment in innovation.

InternetNZ policy lead Susan Chalmers:

InternetNZ (Internet New Zealand Inc) welcomes today’s tabling of a Supplementary Order Paper (SOP) that makes it clear that computer software is not patentable in New Zealand.

Digital technology business group NZRise:

NZRise are delighted that, after years of representations by the NZ digital community, the Government has agreed not to allow patents on software in New Zealand.

New Zealand Open Source Society:

Commerce Minister Craig Foss’ SOP237 – announced today – demonstrates the government’s commitment to ending software patents in NZ… the vast majority of New Zealand software professionals support blocking software patents and will breath a sigh of relief that the spectre of US-style software patent litigation is now unlikely to affect us here.

Blogger David Farrar:

There had been considerable concern that the previous proposed wording with the “as such” clause could lead to a lack of clarity in the law, and that it might not achieve its intention that software is not patentable. This extra clause provides that clarity and is excellent news from the Government and Minister.

Forbes blogger Reuven Cohen:

In doing this, New Zealand is essentially taking the position that existing laws provides enough protection to software as it is; patents only serve to stifle innovation because of the ever-looming threat of being sued by so-called patent troll companies.

Glyn Moody covers the story at TechDirt:

… let’s hope it means that the latest wording won’t need changing again, and that the updated bill banning software patents finally gets passed.

It has also popped up on Slashdot.