One of the most important tools to protect your business – your ideas, customer relationships and talent pool – is your written contract. A solid contract is the foundation for a reliable relationship for you, your customers and your employees. More importantly, it helps to prevent misunderstandings and false expectations that can lead to a breakdown in your customer relationship, jeopardize the project and result in litigation.
Many companies start with a model or “form” contract adapted from forms available online or drafted when the business first started. As businesses develop over time, you may have revised your contracts, adding a little here, removing a little there. Maybe you read an article about an important case in your industry and decided to add some text from the contract discussed in the court’s legal opinion. In many cases, over time, the agreements become “Franken-contracts” an odd amalgamation of trade lingo, inconsistent terms and even contradictory conditions. At best these are ambiguous and confusing to read. At worst, they become unenforceable.
At some point, you should review, revise and generally “tighten” existing contracts. You should have your lawyer review them to make sure that there are no mistakes, ambiguities or omissions that could cost you or your customers. I urge clients to have their contract forms reviewed on an annual basis. Depending on changes in the law, changes in the industry or changes in your own business, this process should only take a few hours.
The following are six things to consider as you review your existing contract forms and business practices.
First, are you using a written contract? Simply having a written agreement in place will help prevent the often difficult, time-consuming and expensive dispute that comes down to a “he said / she said” situation.
Second, make sure that the key terms of your contract are consistent and understandable. Pricing and payment terms, clear descriptions of the services to be performed or the goods to be delivered, as well as due dates and acceptance criteria will go a long way toward preventing breach of contract claims. More importantly, ambiguous and internally-contradictory terms may expose you to fraud claims or claims under an unfair business practices act. These types of claims are typically much more difficult and more expensive to defend against.
Third, create a mechanism for changes in your contract. Circumstances change. When they do, make sure that you document them and that your customer initials and dates any additions or changes to the contract after it is signed.
Fourth, don’t overlook intellectual property (“IP”) rights, Many business relationships involve collaborative sharing or development of knowledge, skills and protectable IP assets such as copyrights, trademarks, patents and trade secrets. Intangible assets are often the most important drivers of revenue creation and value. Overlooking creation, ownership and control of IP rights may result in the loss of these assets.
Fifth, ensure that your contracts are up-to-date with respect to local laws and industry regulations. Recent developments in technology, e.g., BYOD, Social Media, Mobile commerce, and online privacy had produced a raft of state, federal and industry specific laws, rules and regulations. Do you regularly update your forms to make sure they comply with changes to local laws?
Sixth, understand your “escape” options. Not every relationship is meant to last forever. Your contracts should have clear and concise terms for ending the relationship such as failure to perform, failure to pay or adverse business conditions.
To find out more about how the Adler Law Group can help you tighten your contracts, or even draft new ones, contact us for a free, no-obligation consultation.
Do you work with start-up companies and need a basic understanding of the various intellectual property issues that can arise?
I will be co-presenting in this online seminar that will help you:
- understand the trademark and copyright problems your client may encounter with branding;
- learn how to protect your client’s branding once established;
- familiarize your practice with patents, including what they protect, timing, and strategies to prevent inadvertent loss of patent rights before filing the application;
- understand trade secrets and the importance of non-disclosure and confidentiality agreements;
- recognize intellectual property issues relating to technology, including open source code and the cloud;
- establish a proactive approach toward intellectual property ownership between cofounders, employees, and vendors; understand business names, domain names, promotional issues, and website content concerns.
The program qualifies for 1.5 hours MCLE credit.
I would like to personally invite you to attend the upcoming Law Ed program titled, “Identifying Intellectual Property Issues in Start-Ups,” which I will be co-presenting via live webcast on Tuesday, May 27th.
Presented by the ISBA Business Advice and Financial Planning Section
Co-Sponsored by the ISBA Intellectual Property Section
July 1, 2013
Enacted by Congress in 1986, the Computer Fraud and Abuse Act (CFAA) builds upon existing computer fraud law (18 U.S.C. § 1030). Initially, the CFAA was intended to limit federal jurisdiction to cases “with a compelling federal interest-i.e., where computers of the federal government or certain financial institutions are involved or where the crime itself is interstate in nature.” Notably, the CFAA criminalized certain computer-related acts such as distribution of malicious software code, propagating denial of service attacks as well as trafficking in passwords and similar items. Recently, the CFAA has gained prominence as a bludgeon used to prosecute a wide-range of activities, some broadly labelled “hacking” and other stretching the boundaries of “unauthorized” computer access.
Two recently introduced bills, one by Representative Zoe Lofgren (D-CA) in the House and one by Senator Ron Wyden (D-OR) in the Senate aim to amend the CFAA in hopes of ameliorating application of the CFAA to claims of breach of terms of service, employment agreements. Additionally, with the nickname “Aaron’s Law,” they also seek to limit what some see as the CFAA’s tendency to allow for overzealous prosecution that they claim characterized Aaron Swartz’s case.
In short the bills would amend the meaning of “exceeds authorized access,” changing it to “access without authorization,” which is defined to mean:
“to obtain information on a protected computer”;
“that the accesser lacks authorization to obtain”; and
“by knowingly circumventing one or more technological or physical measures that are designed to exclude or prevent unauthorized individuals from obtaining that information.”
For a well-documented discussion of the application and boundaries of the CFAA, check out the Electronic Frontier Foundations Legal Treatise on civil and criminal cases involving the Computer Fraud and Abuse Act here.
As businesses become ever more dependent on digital assets and systems, a working knowledge of the legal and regulatory framework that defines and protects those assets is paramount.
If you or your executive teams has questions about securing and protecting digital assets, please feel free to contact David M. Adler for a free consultation. LSGA advises a wide range of businesses on creating, protecting and leveraging digital assets as well as computer, data and information security and privacy.
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David M. Adler | Leavens, Strand, Glover & Adler, LLC
203 North LaSalle Street, Suite 2550
Chicago, Illinois 60601
Direct: (866) 734-2568
Direct Fax: (312) 275-7534
*2012 Illinois Super Lawyer http://bit.ly/gFfpAt
The rapid growth and expansion in the mobile market presents a number of privacy and security issues for mobile software and hardware developers, platform operators, advertisers and marketers who collect, store, use and share consumer information. As awareness of privacy risks grow among consumers, legislators and regulators are increasing scrutiny of mobile privacy and privacy policies in mobile apps.
Businesses operating in the mobile industry are facing a widening array of Regulatory compliance issues. Staying abreast of legal risks and issues can be daunting. How can mobile operators and application developers spot trends and adjust strategies to start competitive? First, keep an eye on FTC activity. Second, monitor new bills coming up in Congress. Third, follow this blog, adlerlaw.wordpress.com.
FTC Privacy Enforcement Actions
Earlier this year, the FTC expanded mobile privacy obligations beyond software to include hardware makers when it announced a settlement with HTC America over charges that HTC failed to use adequate “security by design” in millions of consumer mobile devices. As a result, the company is required to patch vulnerabilities on the devices which include #Smartphones and #Tablets. The settlement, the first action involving a mobile device manufacturer and the new “Privacy By Design” guidelines, sheds some light on the legal risks for mobile device manufacturers and, to some extent, mobile application developers.
Congressional Privacy Laws, Bills & Initiatives
Not surprisingly, federal legislators are taking up the mantle of Consumer Privacy in the area of Mobile Applications. In January 2013, U.S. Rep. Hank Johnson, introduced his mobile privacy bill, The Application Privacy, Protection and Security Act of 2013, or the “APPS Act,”. The bill focuses on transparency, user control and security, mandating that an application 1) provide the user with notice of the terms and conditions governing the collection, use, storage, and sharing of the personal data, and 2) obtain the consent of the user to the terms and conditions. Significantly, the privacy notice is required to include a description of the categories of personal data that
will be collected, the categories of purposes for which the personal data will be used, and the categories of third parties with which the personal data will be shared.
The Bill also requires that application developers have a data retention policy that governs the length for which the personal data will be stored and the terms and conditions applicable to storage, including a description of the rights of the user and the process by which the user may exercise such rights in addition to data security and access procedures and safeguards.
App developers unaware of the data protection requirements may face significant risks and potential harm to their reputation among users of smart devices. If you have concerns about what key data protection and privacy legal requirements apply to mobile applications and the types of processing an app may undertake contact us for a mobile app legal audit. Vague or incomplete descriptions of the ways which a mobile app handles data or a lack of meaningful consent from end users before that processing takes place can lead to significant legal risk. Poor security measures, an apparent trend towards data maximisation and the elasticity of purposes for which personal data are being collected further contribute to the data protection risks found within the current app environment.
Learn more David M. Adler here.
October 19, 2012
On September 25, 2012, the Federal Trade Commission announced a settlement with seven rent-to-own companies that secretly installed software on rented computers, clandestinely collected information, took pictures of consumers in their homes (WTF?!) and tracked these consumers’ locations.
If you haven’t vomited on your computer from the sickening outrage, you can read the FTC press release here.
Software design firm DesignerWare, LLC licensed software to rent-to-own stores ostensibly to help them track and recover rented computers. The software collected the data that enabled rent-to-own stores, including franchisees of Aaron’s, ColorTyme, and Premier Rental Purchase, to track the location of rented computers without consumers’ knowledge
According to the FTC, the software enabled remote computer disabling if it was stolen, or if the renter failed to make payments. It included an add-on purportedly to help stores locate rented computers and collect late payments. Alarmingly, the software also collected data that allowed the rent-to-own operators to secretly track the location of rented computers, and thus the computers’ users.
When activated, the nefarious feature logged key strokes, captured screen shots and took photographs using a computer’s webcam, according to the FTC. It also presented a fake software program registration screen that tricked consumers into providing their personal contact information.
“An agreement to rent a computer doesn’t give a company license to access consumers’ private emails, bank account information, and medical records, or, even worse, webcam photos of people in the privacy of their own homes,” said Jon Leibowitz, Chairman of the FTC. “The FTC orders today will put an end to their cyber spying.”
“There is no justification for spying on customers. These tactics are offensive invasions of personal privacy,” said Illinois Attorney General Lisa Madigan.