1	Contractual Best Practices Software and Internet Related Agreements October 10, 2003 Montgomery Bar Association Marriott Hotel West Conshohocken Presented by: David A. Feldheim, Esq. 600 W. Germantown Pike, Suite 400 Plymouth Meeting, PA 19462 610-940-1640 David@DAFLAW.com
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11	Software Related Agreements Standard Software License Agreements Software/Web-site Development Agreements Software Maintenance Agreements Source Code Escrow Agreements Disaster Recovery – Continuity Agreements
12	Software License I. Grant of License II. Deliverables III. Training IV. Warranties V. Limitations on Liability VI. Modifications VII. Confidentiality VIII. Fees IX. Boilerplate Provisions
13	Software License Grant of License Exclusivity Restrictions on Use Duration Termination
14	Software License Deliverables Software modules: release or version? Media Documentation - user manual; functional specifications Source code?
15	Software License Training How many employees? How many hours/days? Where? Additional training? Who pays for T& E?
16	Software License Warranties Title; licensed rights; authority to grant license Express performance warranties Implied performance warranties No infringement of copyright, trade secret, trademark, patent or other proprietary rights Disclaimers
17	Software License Limitations on Liability Scope of indemnity; e.g. disclaimer Duration Kinds of damages Amount of damages User defenses?
18	Software License Modifications Derivative work Only owner of copyright in software has right to create or authorize others to create derivative work from software Licensee right to make changes? Ownership of modifications? Licensor rights to use modifications? Impact on maintenance obligations?
19	Software License Confidentiality Proprietary information Trade secrets Restrictions No copying No reverse engineering or decompiling Confidentiality notices NDA with employees Archival backup (how many, how often?)
20	Software License Fees Kinds Timing Limits
21	Software License Boilerplate Provisions Notices
22	Software License Boilerplate Provisions Notices Governing laws
23	Software License Boilerplate Provisions Notices Governing laws Severability
24	Software License Boilerplate Provisions Notices Governing laws Severability Counterparts
25	Software License Boilerplate Provisions Notices Governing laws Severability Counterparts Non-waiver
26	Software License Boilerplate Provisions Notices Governing laws Severability Counterparts Non-waiver Amendments in writing
27	Software License Boilerplate Provisions Notices Governing laws Severability Counterparts Non-waiver Amendments in writing Merger - entire agreement
28	Software License Boilerplate Provisions Notices Governing laws Severability Counterparts Non-waiver Amendments in writing Merger - entire agreement Force majeure
29	Software License Boilerplate Provisions Notices Governing laws Severability Counterparts Non-waiver Amendments in writing Merger - entire agreement Force majeure Assignment
30	Software License Boilerplate Provisions Notices Governing laws Severability Counterparts Non-waiver Amendments in writing Merger - entire agreement Force majeure Assignment No agency; independent contractor
31	Software License Boilerplate Provisions Notices Governing laws Severability Counterparts Non-waiver Amendments in writing Merger - entire agreement Force majeure Assignment No agency; independent contractor Headings
32	Custom Software/Web Site Development Agreements I. Introduction II. Definition of Project Custom Software Development Custom Web Site Development III. Critical Path for Deliverables and Acceptance; A Recommended Approach IV. Timetable for Payment V. Other Important Provisions
33	Custom Software/Web Site Development Agreements I. Introduction Very similar to standard software license except software not “off the shelf” Customization of software has significant legal implications: Standard license provisions Additional provisions become necessary Contracting process and success of the venture dependent on many factors including: Relative sophistication of vendor and customer Size of transaction
34	Custom Software/Web Site Development Agreements II. Definition of Project: Custom Software Development Objectives, tasks, deliverables: Request for proposal Functional specifications Documentation if available
35	Custom Software/Web Site Development Agreements II. Definition of Project: Custom Software Development Objectives, tasks, deliverables: Request for proposal Functional specifications Documentation if available What will System do?
36	Custom Software/Web Site Development Agreements II. Definition of Project: Custom Software Development Objectives, tasks, deliverables: Request for proposal Functional specifications Documentation if available What will System do? Importance of precision: Equipment compatibility Reports, frequency, pertinent data Screen formats System capabilities - store, update and retrieve data Ease of updates and revisions
37	Custom Software/Web Site Development Agreements II. Definition of Project: Custom Software Development Development Schedule Installation Testing Training Data conversion? Pilot
38	Custom Software/Web Site Development Agreements II. Definition of Project: Web Site Development Objectives, tasks, deliverables Roadmap for site development Site Conceptual Framework Site Layout & Design Framework Site Maintenance Site Promotion
39	Custom Software/Web Site Development Agreements II. Definition of Project: Web Site Development Objectives, tasks, deliverables Roadmap for site development Who will perform each task? Developer? Subcontracted consultants, designers, programmers? Site owner?
40	Custom Software/Web Site Development Agreements II. Definition of Project: Web Site Development Site Conceptual Framework Site Purpose Members Public at large
41	Custom Software/Web Site Development Agreements II. Definition of Project: Web Site Development Site Conceptual Framework Site Purpose Members Public at large Life of site Ongoing commitment Funding
42	Custom Software/Web Site Development Agreements II. Definition of Project: Web Site Development Site Conceptual Framework Chat rooms, forums, bulletin boards
43	Custom Software/Web Site Development Agreements II. Definition of Project: Web Site Development Site Conceptual Framework Chat rooms, forums, bulletin boards On-line transactional processing Identify potential transactions Methods of processing Order fulfillment
44	Custom Software/Web Site Development Agreements II. Definition of Project: Web Site Development Site Layout & Design Framework Overall Content Specific content sections Standards of design
45	Custom Software/Web Site Development Agreements II. Definition of Project: Web Site Development Site Layout & Design Framework Overall Content Specific content sections Standards of design Links
46	Custom Software/Web Site Development Agreements II. Definition of Project: Web Site Development Site Layout & Design Framework Overall Content Specific content sections Standards of design Links Static vs. dynamic content
47	Custom Software/Web Site Development Agreements II. Definition of Project: Web Site Development Site Layout & Design Framework Overall Content Specific content sections Standards of design Links Static vs. dynamic content Speed vs. cutting edge design
48	Custom Software/Web Site Development Agreements II. Definition of Project: Web Site Development Site Layout & Design Framework Graphics Framework Size, resolution, pallet Graphics components Navigational aids Assumptions re band width and browser
49	Custom Software/Web-Site Development Agreements Critical Path for Deliverables and Acceptance; A Recommended Approach Importance of precision
50	Custom Software/Web-Site Development Agreements Critical Path for Deliverables and Acceptance; A Recommended Approach Importance of precision Deliverables must have deadlines
51	Custom Software/Web-Site Development Agreements Critical Path for Deliverables and Acceptance; A Recommended Approach Importance of precision Deliverables must have deadlines Deliverables must be submitted with proper labels
52	Custom Software/Web-Site Development Agreements Critical Path for Deliverables and Acceptance; A Recommended Approach Importance of precision Deliverables must have deadlines Deliverables must be submitted with proper labels Acceptance or rejection of deliverables must be within specified time period Disapprovals should state reasons
53	Custom Software/Web-Site Development Agreements Critical Path for Deliverables and Acceptance; A Recommended Approach Importance of precision Deliverables must have deadlines Deliverables must be submitted with proper labels Acceptance or rejection of deliverables must be within specified time period Disapprovals should state reasons Rejected deliverable must be resubmitted within specified time period
54	Custom Software/Web-Site Development Agreements Critical Path for Deliverables and Acceptance; A Recommended Approach Resubmitted deliverable must be accepted or rejected Disapprovals should state reasons
55	Custom Software/Web-Site Development Agreements Critical Path for Deliverables and Acceptance; A Recommended Approach Resubmitted deliverable must be accepted or rejected Disapprovals should state reasons This process must be “Capped”
56	Custom Software/Web-Site Development Agreements Critical Path for Deliverables and Acceptance; A Recommended Approach Resubmitted deliverable must be accepted or rejected Disapprovals should state reasons This process must be “Capped” Rejections and repeated resubmissions may impact timetable: Other dates may or may not be pushed back by contract Deliverables independent and parallel, or sequential and interdependent? When may customer “walk”?
57	Custom Software/Web-Site Development Agreements Critical Path for Deliverables and Acceptance; A Recommended Approach Failure by customer to respond to deliverable: Deemed accepted? Subsequent dates automatically extended?
58	Custom Software/Web-Site Development Agreements Critical Path for Deliverables and Acceptance; A Recommended Approach Failure by customer to respond to deliverable: Deemed accepted? Subsequent dates automatically extended? Acceptance vs. RFP
59	Custom Software/Web-Site Development Agreements Critical Path for Deliverables and Acceptance; A Recommended Approach Failure by customer to respond to deliverable: Deemed accepted? Subsequent dates automatically extended? Acceptance vs. RFP Formal Acceptance
60	Custom Software/Web-Site Development Agreements Timetable for Payment Negotiable Payments targeted to deliverables Significant holdback Schedule to Agreement
61	Custom Software/Web-Site Development Agreements Other Key Provisions Personnel - designate by name
62	Custom Software/Web-Site Development Agreements Other Key Provisions Personnel - designate by name Liquidated damages for failure or delays
63	Custom Software/Web-Site Development Agreements Other Key Provisions Personnel - designate by name Liquidated damages for failure or delays C No subcontracting without customer consent
64	Custom Software/Web-Site Development Agreements Other Key Provisions Personnel - designate by name Liquidated damages for failure or delays C No subcontracting without customer consent D Status reports
65	Custom Software/Web-Site Development Agreements Other Key Provisions Personnel - designate by name Liquidated damages for failure or delays C No subcontracting without customer consent D Status reports E Right of early termination
66	Custom Software/Web-Site Development Agreements Other Key Provisions Personnel - designate by name Liquidated damages for failure or delays C No subcontracting without customer consent D Status reports E Right of early termination F Default
67	Custom Software/Web-Site Development Agreements Other Key Provisions Personnel - designate by name Liquidated damages for failure or delays C No subcontracting without customer consent D Status reports E Right of early termination F Default G Confidentiality
68	Custom Software/Web-Site Development Agreements Other Key Provisions H Ownership
69	Custom Software/Web-Site Development Agreements Other Key Provisions H Ownership I Changes
70	Custom Software/Web-Site Development Agreements Other Key Provisions H Ownership I Changes J Training
71	Custom Software/Web-Site Development Agreements Other Key Provisions H Ownership I Changes J Training K Installation
72	Software Maintenance Agreements I. Introduction II. What is Included in Maintenance? III. Customer Limitations IV. Other Considerations
73	Software Maintenance Agreements Introduction Some form of maintenance usually included for initial limited period as part of license
74	Software Maintenance Agreements Introduction Some form of maintenance usually included for initial limited period as part of license Maintenance may be part of license agreement or in separate instrument
75	Software Maintenance Agreements Introduction Some form of maintenance usually included for initial limited period as part of license Maintenance may be part of license agreement or in separate instrument Usual term one year
76	Software Maintenance Agreements What is Included in Maintenance? Updates and improvements
77	Software Maintenance Agreements What is Included in Maintenance? Updates and improvements Error correction
78	Software Maintenance Agreements What is Included in Maintenance? Updates and improvements Error correction Telephone consultation
79	Software Maintenance Agreements What is Included in Maintenance? Updates and improvements Error correction Telephone consultation Right to request additional training, consultations, seminars
80	Software Maintenance Agreements What is Included in Maintenance? Updates and improvements Error correction Telephone consultation Right to request additional training, consultations, seminars Right to request customized software enhancements
81	Software Maintenance Agreements Customer Limitations Vendor usually decides which updates are free and which cost extra
82	Software Maintenance Agreements Customer Limitations Vendor usually decides which updates are free and which cost extra Customer failure to subscribe to maintenance
83	Software Maintenance Agreements Customer Limitations Vendor usually decides which updates are free and which cost extra Customer failure to subscribe to maintenance Customer modification of software may impact vendor’s maintenance obligations
84	Software Maintenance Agreements Customer Limitations Vendor usually decides which updates are free and which cost extra Customer failure to subscribe to maintenance Customer modification of software may impact vendor’s maintenance obligations Customer failure to make changes or corrections provided by vendor may have consequences
85	Software Maintenance Agreements Customer Limitations Vendor usually decides which updates are free and which cost extra Customer failure to subscribe to maintenance Customer modification of software may impact vendor’s maintenance obligations Customer failure to make changes or corrections provided by vendor may have consequences Duty by customer to provide documentation to substantiate claimed errors
86	Software Maintenance Agreements Customer Limitations Vendor usually decides which updates are free and which cost extra Customer failure to subscribe to maintenance Customer modification of software may impact vendor’s maintenance obligations Customer failure to make changes or corrections provided by vendor may have consequences Duty by customer to provide documentation to substantiate claimed errors No duty by vendor to correct all errors
87	Software Maintenance Agreements Customer Limitations Vendor usually decides which updates are free and which cost extra Customer failure to subscribe to maintenance Customer modification of software may impact vendor’s maintenance obligations Customer failure to make changes or corrections provided by vendor may have consequences Duty by customer to provide documentation to substantiate claimed errors No duty by vendor to correct all errors Vendor charge if no error or if error not vendor’s fault
88	Source Code Escrow Agreements I. Introduction II. Release Conditions
89	Source Code Escrow Agreements Release Conditions Depositor in breach of license agreement Depositor’s failure to carry out obligations under license agreement Depositor unwilling or unable to support the software Depositor’s failure to continue to do business in the ordinary course Instructions from depositor’s trustee in bankruptcy [Bankruptcy Code 365(n)]
90	Source Code Escrow Agreements Release Conditions Depositor’s instructions Court Order Entry of order for relief under Chapter 11 Making of assignment for the benefit of creditors Appointment of receiver or trustee in bankruptcy
91	Computer Disaster Backup Recovery Agreements I. Early Concepts II. Disaster Recovery Vendors - Empty Shell III. Full Disaster Recovery Services IV. Disaster Backup Contract Issues V. Other Significant Contract Issues
92	Computer Disaster Backup Recovery Agreements Early Concepts A Clubs B Reciprocal Arrangements C Empty Shell D Deficiencies
93	Computer Disaster Backup Recovery Agreements Full Disaster Recovery Services Installed equipment configuration Office and storage space Telecommunications D Testing
94	Computer Disaster Backup Recovery Agreements Disaster Backup Contract Issues Use of idle equipment - timesharing What equipment and telecommunications are included? Is other equipment available at additional charge? May subscriber install additional equipment? How quickly may subscriber gain access? What support personnel with be available? How long will subscriber have access to backup site? How much testing time is permitted?
95	Computer Disaster Backup Recovery Agreements Other Significant Contract Issues What is a Disaster?
96	Computer Disaster Backup Recovery Agreements Other Significant Contract Issues Risk of multiple disasters! Limit on number of subscribers No two customers with data center in same building No new subscription agreement while user is experiencing a disaster Significant “ring the bell” fee Multiple back-up sites Framework of cooperation
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107	Internet Related Agreements Internet Service Provider Agreements Web Site Hosting Agreements Linking and Co-Branding Agreements Web Site Subscription Agreements Professional Services Agreements
108	Internet Related Agreements Internet Service Provider Agreements Term Technical Specifications Backup Availability Content Security Indecency Spamming
109	Internet Related Agreements Web Site Hosting Agreements Availability; Exceptions Storage and Security Acceptable Use Warranties; Disclaimer Specifications (Exhibit A)
110	Internet Related Agreements Linking and Co-Branding Agreements Business Relationship Purchase of Goods and Services Commissions Icon size Top Level Display Auditing Advertising Obscenity
111	Internet Related Agreements Web Site Subscription Agreements I. Examples II. Subscription Options III. Legal Issues
112	Internet Related Agreements Web Site Subscription Agreements I. Examples Newspapers Financial/Investment Information Customer Community Catalogue Other
113	Internet Related Agreements Web Site Subscription Agreements II. Subscription Options Access to site Fee to print articles or information Directory listing of subscribers Develop subscriber’s Web Site Develop and host subscriber’s Web Site Hyperlink of subscriber’s Web Site to host site
114	Internet Related Agreements Web Site Subscription Agreements III. Legal Issues Confidentiality Spamming Downtime Inaccuracies Privacy; cookies Framing Public access Compensation Exclusivity
115	Professional Services Agreements Standard Terms Statements of Work (SOW)
116	Professional Services Agreements Standard Terms Statements of Work (SOW) Exclusivity
117	Professional Services Agreements Standard Terms Statements of Work (SOW) Exclusivity Deliverables
118	Professional Services Agreements Standard Terms Statements of Work (SOW) Exclusivity Deliverables Modification to SOW’s
119	Professional Services Agreements Standard Terms Statements of Work (SOW) Exclusivity Deliverables Modification to SOW’s Replacement of Personnel
120	Professional Services Agreements Standard Terms Statements of Work (SOW) Exclusivity Deliverables Modification to SOW’s Replacement of Personnel Warranties and Disclaimers of Warranties
121	Professional Services Agreements Standard Terms Statements of Work (SOW) Exclusivity Deliverables Modification to SOW’s Replacement of Personnel Warranties and Disclaimers of Warranties Subcontractors (Separate Professional Services Agreement)
122	Professional Services Agreements Standard Terms Statements of Work (SOW) Exclusivity Deliverables Modification to SOW’s Replacement of Personnel Warranties and Disclaimers of Warranties Subcontractors (Separate Professional Services Agreement) Intellectual Property Rights (“Works Made for Hire”)
123	Professional Services Agreements Standard Terms Statements of Work (SOW) Exclusivity Deliverables Modification to SOW’s Replacement of Personnel Warranties and Disclaimers of Warranties Subcontractors (Separate Professional Services Agreement) Intellectual Property Rights (“Works Made for Hire”) Confidentiality
124	Professional Services Agreements Standard Terms Statements of Work (SOW) Exclusivity Deliverables Modification to SOW’s Replacement of Personnel Warranties and Disclaimers of Warranties Subcontractors (Separate Professional Services Agreement) Intellectual Property Rights (“Works Made for Hire”) Confidentiality Non-Solicitation
125	Professional Services Agreements Standard Terms Statements of Work (SOW) Exclusivity Deliverables Modification to SOW’s Replacement of Personnel Warranties and Disclaimers of Warranties Subcontractors (Separate Professional Services Agreement) Intellectual Property Rights (“Works Made for Hire”) Confidentiality Non-Solicitation Payment (Expenses)
126	Professional Services Agreements Standard Terms Statements of Work (SOW) Exclusivity Deliverables Modification to SOW’s Replacement of Personnel Warranties and Disclaimers of Warranties Subcontractors (Separate Professional Services Agreement) Intellectual Property Rights (“Works Made for Hire”) Confidentiality Non-Solicitation Payment (Expenses) Term and Termination For Convenience, i.e. without cause Multiple SOW’s
127	Professional Services Agreements Standard Terms Statements of Work (SOW) Exclusivity Deliverables Modification to SOW’s Replacement of Personnel Warranties and Disclaimers of Warranties Subcontractors (Separate Professional Services Agreement) Intellectual Property Rights (“Works Made for Hire”) Confidentiality Non-Solicitation Payment (Expenses) Term and Termination For Convenience, i.e. without cause Multiple SOW’s Insurance
128	Professional Services Agreements Standard Terms Statements of Work (SOW) Exclusivity Deliverables Modification to SOW’s Replacement of Personnel Warranties and Disclaimers of Warranties Subcontractors (Separate Professional Services Agreement) Intellectual Property Rights (“Works Made for Hire”) Confidentiality Non-Solicitation Payment (Expenses) Term and Termination For Convenience, i.e. without cause Multiple SOW’s Insurance Indemnities; Limits on Liability