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>Software licenses, assignability, and mergers

>A new case was handed down out of the Sixth Circuit last week that dealt with software licensing. In this case, a company had licensed some software, and the license agreement contained some of the standard non-assignment language: that the license was non-transferable and that the licensee could not transfer its rights without the approval of the licensor. The licensee underwent some corporate reorganization — it was merged into a new entity. The key thing here is that the merger was *not* with a third party entity or as part of buying assets. This case stemmed simply from a parent company consolidating a set of wholly-owned subsidiaries. However, even though, pre- and post-merger, the software sat on the same computer, doing the same thing, at the same location, the surviving entity was in violation of the software license as a result of the merger.So, two tips for all of the… Continue Reading

>Potential New Implied Software License Warranty

>The American Law Institute has issued a proposed final draft on the “Principles of Law of Software Contracts” (click here to obtain a copy). In this draft, the ALI seeks to provide (suggested) clarifications and requirements in the context of software licenses. While it is not a law or statute, it does serve as a model for States to choose to adopt, and can provide guidance to judges who seek assistance in interpreting software licenses and contracts. One of the areas of concern is that the draft creates an implied warranty of no material hidden defects AND that this warranty is non-disclaimable. The effect, if this were to become law, would be that customers would be able to bring a claim for bugs in the software. Of course, depending on whether you are a software developer or a software buyer will dictate your reaction to this new “requirement.” Looking closer… Continue Reading

>Clickwrap Agreements and the iPhone

>I was thinking about this issue the other day as a potential blog posting, but now that I’ve sat down to write the post, this may be deserving of an entire paper. Clickwrap/browsewrap/shrinkwrap agreements all have the same fundamental characteristic: “automatic” consent to the terms of the agreement as a condition to use the product. The documents are generally non-negotiable. The quid pro quo is that a software vendor would have to double, triple (or more) the software license fee if it were required to negotiate each agreement with each customer. While initially controversial, these form of agreements have become the accepted manner of entering into agreements in the software (and video game) arenas. As software delivery continues its shift to the internet, the issues of the legality and enforceability of clickwrap agreements may end up being revisited.The thing that brought this to mind is the latest version of the… Continue Reading

>Tip: Work Made for Hire vs. Get the Assignment

>One of the more common missteps involving intellectual property is the concept of a work made for hire. This concept is defined in the U.S. Copyright Act and there is a lot of case law over the years regarding it. Many people believe that “if Company A paid for Person B to develop The Thing, then Company A owns The Thing”… like all things lawyer, the answer is “maybe.” If Person B was an employee of Company A and it was part of Person’s B to develop The Thing, then The thing is a work made for hire. There is a second concept for work made for hire……that is spelled out in the statute, but it requires many other extra hoops for The Thing to qualify as a work made for hire. However, as you can see, not every instance qualifies as a work made for hire. And, if The… Continue Reading

>Activision v. Double Fine

>Another day, another publisher-developer lawsuit. This time, Activision filed a suit against Double Fine (headed by Tim Schafer, of Psychonauts and Day of the Tentacle fame) last week in an effort to prevent the release of the new game Brutal Legend. Activision claims it still has the rights to release Brutal Legend, which it acquired by way of its merger with Vivendi Games last year. In its complaint, Activision says that Vivendi Games invested roughly $15 million in Brutal Legend before the merger. However, Activision dropped Brutal Legend after the merger was complete, and didn’t continue efforts to publish the title. When a publisher loses interest in a half-finished game, developers can be left in limbo. At that point, publishers have invested money in the game, and usually have been granted certain rights in return. And without those rights, developers can have a hard time getting a new publisher on-board… Continue Reading

>Tip: Contract Indemnification

>Indemnification provisions are pretty common in software development agreements. The key with an indemnity is determining the appropriate trigger events. For example, should a only third party claim trigger the indemnity is should any loss by the other party? Perhaps only certain kinds of losses will be covered by the indemnity? Another point to consider is whether the indemnity obligation should be capped by the limitation of liability in the agreement. Consider whether the indemnity should be separated from the limitation, or that a separate cap should apply.Lastly (for this post), if the indemnifying party has an obligation to defend the other party, be sure to consider the full practical effect of that obligation. Sure, it may be all well and good that the cost of paying lawyers to defend the lawsuit has been shifted to the other party — but, do you really want that other party to be… Continue Reading

>Take-Two and 3D Realms are All Out of Gum

>A soured game publishing deal has ended in litigation between the developer and publisher. Last Friday, Duke Nukem Forever publisher Take-Two Interactive sued developer 3D Realms’ parent company, Apogee Software Ltd. Take-Two is accusing 3D Realms of failing to deliver on a contract to produce Duke Nukem Forever after Take-Two paid $12 million in 2000. The success of Take-Two’s suit may depend on how well-defined the obligations are within its publishing agreement with 3D Realms.Earlier this month, there had been rumors that 3D Realms had shut down, and 3D Realms did confirm that the Duke Nukem Forever development team was let go on May 6. However, today, 3D Realms issued a statement declaring that it is not going out of business. The statement said 3D Realms has not closed down entirely, and 3D Realms still retains ownership of the Duke Nukem-related intellectual property. 3D Realms says it will continue to… Continue Reading

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