[UPDATED 2010-09-02]

PRECUT ™ NDA Downloads

• NDA form (fillable PDF)
• Curator’s Notes (PDF)
• Word document containing all PRECUT NDA clauses, plus numerous other NDA provisions that can be copied to a custom addendum (RTF)
• Confidentiality provisions adddendum — just the confidentiality provisions from the PRECUT NDA, for possible use with other agreements

Commentary

The PRECUT ™ Nondisclosure Agreement is a free, balanced, multi-purpose, customizable NDA, in the form of a fill-in PDF.

While of course no contract form can be one-size-fits-all, for many purposes the PRECUT NDA should be pretty much ready to sign as-is.

The Curator’s Notes contain many additional clauses and extensive commentary.

Ask your lawyer whether you could save time and money by using the PRECUT NDA as the foundation for your next nondisclosure agreement.

This is the first of what I hope will be a series of ready-to-sign contract forms available under a Creative Commons license.

Comments and other feedback are welcome, especially suggestions for other types of contract that you’d like to see developed.

See also: (list is automatically generated)

• PRECUT free, balanced, curated technology contracts
• PRECUT confidentiality provisions addendum is up
• Confidentiality agreement (NDA) short-form starter draft and annotated long form

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A couple of hours ago the U.S. Supreme Court handed down its much-anticipated Bilski decision. The Court seems to have left the door open for patenting at least some business methods, but the justices were pretty divided:

• All nine justices agreed that the particular claimed method of hedging risk was not patentable — but that contrary to the Federal Circuit’s view, the machine-or-transformation test was not the exclusive test of potential patentability.
• Justice Kennedy (joined by Roberts, Thomas, and Alito) said in essence that business-method patents were entirely appropriate for a modern information-based economy.
• Retiring Justice Stevens (joined by Ginsburg, Breyer, and Sotomayor) disagreed completely, saying in essence that business methods should be per se unpatentable.
• Justice Scalia didn’t join either of these two sides.

Unfortunately, Justice Kennedy’s opinion didn’t offer much guidance about what distinguished a potentially-patentable business method from an unpatentable one.

The Court’s decision doubtless means more billable hours for lawyers who write and litigate business-method patents.

I’m not sure businesses will be quite so thrilled about the uncertainty left by the decision.

See also: (list is automatically generated)

• Prediction: Spam-filtering patent lawsuit against Apple, Google, etc., will be knocked out early on Bilski “abstract idea” grounds
• Supreme Court nixes expanded judicial review of arbitration awards (but stay tuned ….)
• Quick, patent it! – NY Times editorial

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If you’re an employee of a company, and you sign a company contract as just “John Doe,” you might end up being held personally liable for the company’s obligations. (If you’re the owner of the company as a sole proprietor, or the general partner of a partnership, you probably will be personally liable in any case.)

A better way to sign a company contract is to have the signature block:

• clearly indicate that it’s the company, not you personally, that is agreeing to the contract, and that you’re simply signing on its behalf; and
• stating your title.

The wrong way to sign a company contract

A better way

Further reading

• Protecting the Deal Professional from Personal Liability for Contract-Related Claims, by Glen D. West, of the Weil Gotshal firm.

See also: (list is automatically generated)

• Note-taking in meetings and phone calls: Three easy habits your lawyer will love you for
• Clients seem to like Webcam video conferences, with on-line document sharing, better than traditional on-site meetings
• An oral understanding might not get you off the hook for a written contractual obligation

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Chances are that at some point in your career, a lawyer — yours, or someone else’s — will want to review notes you took at a meeting or during a phone conversation. So thinking ahead to that possibility, whenever you take notes, you should routinely do as many of the fol­low­ing things as you can remember, especially the first three things, to increase the odds that a later reviewer will get an ac­cur­ate picture of the event. It will help you stay out of un­de­served trouble and save money on legal fees

1. Indicate who said what you’re writing down.  Unless you want to risk having someone else’s statements mistakenly attributed to you, indicate in your notes just who has said what.  EXAMPLE:  Suppose that John Doe says in a meeting that your company’s off­shore oil-well drilling project can skip certain safety checks. Re­mem­ber­ing the BP drilling disaster in the Gulf of Mexico, you don’t want anyone to think you were the guy who sug­ges­ted this. So your notes might say, for example, "JD: Let’s skip safety checks,"; if you omitted John Doe’s initials, it wouldn’t be clear that you weren’t the one who made his suggestion.
2. On every page, write the meeting date and time, the subject, and the page number. The rea­son: Your lawyer will probably want to build a chronology of events; you can help her put the meeting in­to the proper context by “timestamping” your notes. This will also reduce the risk that an unfriendly party might try to quote your notes out of context.
3. If a lawyer is participating, indicate this.  That will help your lawyer sep­ar­ate out documents that might be protected by the attorney-client privilege. EXAMPLE:  “Partici­pants:  John Doe (CEO); Ron Roe (ABC Consulting, Inc.); Jane Joe (general counsel).”
4. Start with a clean sheet of paper.  When copies of documents are provided to opposing counsel, in a lawsuit or other investigation, it’s better if a given page of notes doesn’t have un­re­la­ted in­for­ma­tion on it.  This goes for people who take notes in bound paper note­books too: It’s best to start notes for each meeting or phone call on a new page, even though this means you’ll use up your note­books more quickly.
5. Write in pen for easier photocopying and/or scanning, and also because pencil notes might make a reviewer (for example, as an opposing counsel) wonder whether you might have erased anything, and perhaps falsely ac­cuse you of having done so.
6. Write “CONFIDENTIAL” at the top of each page of confidential notes. That will help preserve any applicable trade-secret rights; it will also help your lawyer segregate such notes for possible special handling in the lawsuit or other investigation.
7. List the participants. Listing the participants serves as a key to the initials you’ll be using, as discussed in item 1 above.  It can also refresh your recollection if you ever have to testify about the meet­ing. If some people are participating in an in-person meeting by phone, indicate that. Indicate each participant’s role if isn’t ob­vi­ous or well-known – remember, you might know who someone is, but a later reader likely won’t.  EXAMPLE:  “Partici­pants:  John Doe (CEO); Ron Roe (ABC Consulting, Inc.); Chris Coe (marketing).”
8. Indicate the time someone joins or leaves the meeting, es­pe­ci­al­ly if it’s you (so that you’re not later accused of having still been there if something bad happened after you left).
9. Write down the stop time of the meeting. This usually isn’t a big deal, but it’s nice to have for completeness.

See also: (list is automatically generated)

• How to sign a company contract without incurring personal liability
• Clients seem to like Webcam video conferences, with on-line document sharing, better than traditional on-site meetings
• Forget short contracts – focus instead on short clauses

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In one of those smack-your-forehead moments, I realized that there’s an obvious fifth ques­tion to be added to yesterday’s list of four ques­tions that should be asked at every business meeting (which as a re­sult would now have the acronym GPPPA):

• Goals: What are we trying to achieve in this project or relationship, and why? [In some circumstances, Toyota's Five Whys drill-down analysis might be helpful.]

I’ve updated the original posting accordingly.

See also: (list is automatically generated)

• G-PP-AA: Five questions to ask at every business meeting you ever attend

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From Law.com, here’s an excerpt from the closing argument of counsel for DataTreasury in its successful lawsuit against U.S. Bank:

But we protect our inventors. We protect our inventors. And that’s why we’re ahead of the game. We’re ahead of the game, because the United States Patent Office — and the first Patent Examiner, by the way, was Thomas Jefferson [sic]. The United States Patent Office protects inventors.

It’s the only way we can prevent — we can protect them. And they make America strong. They keep America the strongest country in the world, because people in America have incentives to create. Because if they create and they make something new and different, then they have a chance to get ahead.

That’s the American dream. That’s what we all believe in, is the American dream. And that’s why we are the strongest country in the world. We’re not [the] strongest country in the world because big banks have the power to try to steal intellectual property…

Now, [defense lawyer] Mr. [John] Gutkoski, he said to you this is just a piece of paper. That’s the seal of the United States Patent & Trademark Office. That means something. I wonder if Mr. Gutkoski thinks that the Declaration of Independence is just a piece of paper. And I wonder if he just thinks that the United States Constitution is just a piece of paper. There are boys in Iraq and Afghanistan that are dying for that piece of paper. It’s not a piece of paper. It’s what the piece of paper represents.

This represents the disinterested, the unbiased evaluation of four experts who have evaluated the Ballard technology. And they have told you that this invention is real; it’s new; it’s novel; and it needs to be protected. Trust the Patent Office, folks. Trust the Patent Office.

(Emphasis added; hat tip: Stanford law prof Mark Lemley)

See also: (list is automatically generated)

• DataTreasury v. U.S. Bancorp $27 million patent infringement verdict – useful links, a partial defense win, and the patent owner’s bloody-shirt jury argument
• How to write and file a patent application in one day, without taking notes
• Quick, patent it! – NY Times editorial

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A federal court in Ohio provides us with an example of why contract negotiators should plan ahead for an orderly shut-down of a business relationship — using, for example, the S N I T S approach to contract drafting. Here’s what has happened, so far, in the Ohio court case:

• Mitsubishi Caterpillar Forklift wanted to migrate its on-line parts catalog from one hosting company to another.
• The first hosting company, however, refused to provide Mitsubishi with an electronic copy of the parts-catalog data (which the hosting company had created by converting Mitsubishi catalogs) unless Mitsubishi paid a fee.
• So the second hosting company used an automated data retrieval program (colloquially known as a scraper) to extract Mitsubishi’s catalog data from the first hosting company’s Web site — allegedly causing problems for the site.
• The first hosting company sued the second one under the Computer Fraud and Abuse Act and for misappropriation of trade secrets, trespass to chattels, copyright infringement, and breach of contract.
• The second hosting company moved for summary judgment dismissing the first company’s lawsuit, on grounds that it had done no more than rescue Mitsubishi’s hostage data, so to speak.
• The judge, however, ruled that genuine disputes existed about material issues of fact — thus, summary judgment was improper and a(n expensive) trial would be necessary.

See Snap-on Business Solutions, Inc. v. v. O’Neil & Assocs., Inc., No. 5:09-CV-1547 (N.D. Ohio Apr. 16, 2010) (denying relevant parts of defendant’s motion for summary judgment).

This could have been avoided if Mitsubishi’s contract people had been able to negotiate the right to require the first hosting company to provide Mitsubishi with an electronic copy of its catalog data. (Perhaps they tried but failed.)

See also: (list is automatically generated)

• Privacy policy for Web sites – sample language
• Electronic-signature system allowed others to edit doc – employee’s signature held invalid
• Oral confidentiality agreement with consultant held binding

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Companies often don’t have the bargaining power to get their way in contract negotiations. When that’s the case, they have to think of other ways to help protect their business interests. Imagine, for example, that a customer is negotiating a master purchasing contract with a vendor.

• The customer would love to flatly prohibit the vendor from raising prices without the customer’s consent. But the vendor’s negotiators won’t go along with such a prohibition.
• The vendor would love to have the unfettered discretion to raise the customer’s prices whenever it wants. But the customer’s negotiators insist on at least some protection on that score.

What to do? In no particular order, here are three possible approaches that the parties could consider trying.

Non-discrimination language

A non-discrimination requirement at least brings a bit of overall-market discipline into the picture.

EXAMPLE: Vendor will not increase the prices it charges to Customer except as part of a non-targeted, across-the-board pricing increase by Vendor, applicable to its customers generally, for the relevant goods or services.

COMMENT: Vendor might want to qualify this language, so as to limit how general a price increase must be before it can be applied to Customer.

Advance-warning requirement

An advance-warning requirement can buy time for its beneficiary to look around for alternatives (assuming of course that the contract doesn’t lock in the beneficiary somehow, for example with a minimum-purchase requirement or a “requirements” provision).

EXAMPLE: Vendor will give Customer at least X [days | months] advance notice of any increase in the pricing it charges to Customer under this Agreement.

Transparency requirement

Requiring a party to provide information justifying its action, upon request, can force that party to think twice about doing something, even though it technically has the right to do it.

EXAMPLE [UPDATED]: If requested by Customer within X days after notice of a pricing increase, Vendor will seasonably provide Customer with documentation showing, with reasonable completeness and accuracy, a written explanation of the reason for the increase, including reasonable details about Vendor’s relevant cost structures. relevant to the pricing increase. Customer will maintain all such documentation in confidence any nonpublic information in such explanation, will not disclose the nonpublic information to third parties, and will use it only for purposes of making decisions about potential purchases under this Agreement.

COMMENT: Note the if-requested language, which relieves Vendor from the burden of continually managing this requirement — although a smart vendor would plan ahead and have the required documentation ready to go.

The above examples are specific to price increases, but the concepts can be adapted to a variety of needs.

See also: (list is automatically generated)

• How to sign a company contract without incurring personal liability
• Note-taking in meetings and phone calls: Three easy habits your lawyer will love you for
• Six tips for negotiating best-efforts obligations

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Some lawyers seem to think that “cease and desist” and “demand” letters should threaten a lawsuit if the other side doesn’t do what’s demanded. It’s been my experience, though, that nothing good ever comes from explicitly threatening to sue:

• Your letter will not cause the other side to suddenly see the light and agree with your position, especially if there’s any uncertainty at all about who’s right. If anything, a threatening letter will often have the opposite effect. (Letters full of bluster always make me think of the screeching-apes scene at the beginning of 2001: A Space Odyssey.)
• Alerted by your threat, the other side might beat you to the punch by suing you — in a court you might have wanted to avoid — for a declaratory judgment that they’re not liable, sort of like the swordsman scene in Raiders of the Lost Ark.
• If you don’t make good on your threat, the other side will conclude that you’re all bark and no bite, which likely will make it more difficult to settle on terms you like.

The better course, I’ve found, is to write the demand letter as a courteous, professional-sounding business letter:

• Briefly describe the problem, in a factual, non-argumentative way — with enough details to educate the other side’s lawyer (your real audience) and keep the other side from later claiming that your notice was insufficient.
• Ask that the other side’s lawyer contact you as soon as possible to discuss the matter.
• If your demand letter is about a breach of contract, emphasize (if true) that your client wants to preserve the business relationship.
• Don’t even hint that you might file a lawsuit.

This won’t guarantee a favorable settlement by any means. But neither will it needlessly get in the way of one.

See also: (list is automatically generated)

• Cease-and-desist letters: Five ways to keep your client and yourself from looking foolish
• Monster Cables picked the wrong guy to threaten
• Note-taking in meetings and phone calls: Three easy habits your lawyer will love you for

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The open-source community burst into song yesterday after a jury decided an important contract case involving open-source software. The jury found that, when Novell Inc. sold the source code for the iconic Unix operating system to SCO Group Inc., it did not sell the copyright(s) in the code.

If the verdict stands, it will be a huge relief to the open-source community: SCO won’t be able to continue to pursue copyright-infringement suits against vendors of the equally-iconic Linux operating system, which SCO claimed infringed the Unix copyrights.

You might be scratching your head about this. In buying Unix, SCO acquired an intellectual-property asset of global significance. How on earth could they have signed a contract that didn’t convey ownership of the key intellectual-property rights, namely the copyrights and trademarks? Did their lawyers screw up, or what?

Fortunately, Silicon Valley lawyer George Grellas has posted an explanation that makes sense of it all, sort of — it seems the problem was money.

See also: (list is automatically generated)

• Contractor includes GPL code in deliverable – customer has to publish its own source code
• Source code escrows usually aren’t worth the bother
• Sales rep’s use of former employer’s copyrighted form book leads to $18 million verdict against new employer

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