Technology Contracts Glossary

8/7/2019 Technology Contracts Glossary

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Copyright © 2009, 2011, 2012 Harry Boadwee. All Rights Reserved.

Originally published at www.BoadweeLaw.com/glossary

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MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

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Revised April 6, 2011. Broken links fixed June 14, 2012.

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Introduction

This is an online glossary of words often used in connection with technology, internet and softwarecontracts.

Many other glossaries and dictionaries discuss the precise meaning of a word, but don’t explain itscontext or why it is important in a practical setting.

This glossary tries to break from that approach. It attempts to define each word simply, for business people, and in many cases explains why the word is used or important. Of course, feelfree to contact me with any errors or corrections: Harry Boadwee, http://www.BoadweeLaw.com.

A

Acceptable Use Policy (AUP)

A policy governing use of a web site or web services by end users. AUP’s typically prohibitsending unsolicited bulk email (spam), impersonating others, and distributing harmful content(such as infringing or defamatory content) or functionality (such as software code containingviruses).

Acceptance (of a Deliverable)

The approval of a Deliverable, which often is a condition to payment for preparation of thatDeliverable. In an Independent Contractor Agreement or Software Development Agreement, it

often is important to specify in detail the requirements or criteria for acceptance of the work performed. Many contracts include a provision for “deemed acceptance” in which the work product is considered accepted if the work is not accepted or rejected within a set time period. Inother words, the work is considered to be accepted, even though no acceptance is formally givenunder the agreement.

Acceptance (of an Offer for a Contract)

See Formation of Contract.

Access to and delivery of Work

Access to a Work itself is separate from the legal rights to use it. For example, you may own a book, but may not have access to it if it is locked up in your friend’s office. Many people draftcontracts with rights to use a Work, but don’t provide for access to the Work itself, such as alicense granting a right to use upgrades but no obligation to deliver them.

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Acknowledgement

In the U.S., a signature can be acknowledged or notarized by a legally authorized person known asa notary public or notary. Acknowledgements are most often used in real estate transactions, suchas sales or mortgages of real estate, and in estate planning, such as trusts, wills or related

documents. Some Assignments and exclusive Licenses of Intellectual Property should or can berecorded with government filing offices. These include Assignments or exclusive Licenses of Patents, Trademarks and registered Copyrights. Having an Acknowledgement of the signatures onthe document means that the signatures on the document are taken on their face to be valid, and donot need to be proven (in legal terms, prima facie valid). This in turn makes it easier to legallyenforce the documents. Also known as Notarization.

Advance against Royalties

An advance of money to a creator of a Work, which is hoped to be Recouped by later Royaltiesgenerated from sales of the Work. For example, a publisher may advance money to a creator (such

as a book author or music recording artist) to enable the creator to create the Work. That advanceis typically recovered by the publisher out of royalties received from the sale of the Work. In asense, an advance against royalties is similar to a loan, since the goal is for it to be paid back.Unlike a loan however, no interest is payable and the advance is paid back if and only if there areenough sales (and therefore Royalties) to recover the advance. The publisher takes the risk if salesare inadequate. In the book industry, publishers speak of whether a book has “earned out” itsadvance or not. See also Cross-Collateralization and Recoupment.

Affiliate

(1) A persons or entity that owns the stock or other ownership interests of other entities. The most

common definition of an Affiliate is a person or entity who “controls, is controlled by or is under common control with” another party. Parent companies, subsidiaries and sister companies all can be Affiliates of one another. In agreements with large companies, it is important to specifywhether the benefits and burdens of the agreement apply to all Affiliates of the large company. (2)In internet marketing, a person who acts as a sales representative for a company and undertakesonline advertising and promotion in order to receive sales commissions, often through automatedtracking of specially coded Links.

Aggregate

Lawyer jargon for “the total amount you get when you add up several amounts.” For example, the

“aggregate payments” under a contract could be the sum of royalties, development fees andexpense reimbursement.

All Rights Reserved

A form of notice of claim to Copyright protection under the Buenos Aires Copyright Convention,which has essentially been superseded by the Berne Convention. See Ius Mentis, The phrase “Allrights reserved”. See also Some Rights Reserved.


http://www.iusmentis.com/copyright/allrightsreserved/






Alpha (version of Software)

A rough preliminary release of software, which may include major errors (bugs), which may notinclude all features, and which generally is not released to end users for testing. See also thiscomprehensive article about the Software Release Life Cycle.

Application Programming Interface (API)

A group of specifications (including structured formats for creation, storage and transmission of data) used by programmers to interface software programs or online services.

Application Programming Interface (API) License

A contract containing a License to use an API. API Licenses may require the programmer toregister and obtain a “developer key” to access the API, and may place quotas on the volume of use of the API (e.g., number of queries or calls to an API).

Arbitration

A method to resolve disputes outside of government-run court systems. In arbitration, the partieshire one or more private arbitrators (often retired judges or expert lawyers) to hear testimony andmake a decision. Supporters of arbitration say that it makes resolving disputes cheaper, quicker and less expensive, but many litigation attorneys do not agree. Arbitration is frequently used ininternational disputes, in a desire to avoid the potential biases of a court system in a particular country.

Assignee

The person to whom a contract is assigned.

Assignment (of Intellectual Property rights)

The transfer of Intellectual Property rights. This is most often phrased as a transfer of “all right,title and interest in and to” the specified Intellectual Property rights. In many cases, theAssignment of certain Intellectual Property rights must be filed and recorded with a governmentfiling office (such as the U.S. Patent & Trademark Office or the U.S. Copyright Office) in order for the Assignment to be valid against claims by others in the future. Contrast with a License(permission to use) and a Work Made for Hire.

Assignment and Delegation (of Contract)

The transfer of the rights and obligations under a contract from one of the parties to a third personor company. Contracts are considered personal property (like a chair or an automobile), and assuch are transferable like other personal property. This transfer with respect to a contract is calledan assignment. (Technically, rights are assigned, and obligations are delegated, but many contractsdo not make this distinction.)


http://en.wikipedia.org/wiki/Software_release_life_cycle




Assignment, Backup

An Assignment of Intellectual Property rights which is effective if a transfer of a Work as a Work Made for Hire is not legally effective. Because only certain Works can qualify as a Work Madefor Hire under U.S. Copyright law, it is very common in work for hire agreements to include an

Assignment (of Intellectual Property rights) as a backup. That way, if the rights to the work product do not transfer under the statute as a Work Made for Hire, they will be transferred by anAssignment in the contract. In other words, if a transfer under the law is not sufficient, then it issupplemented by a transfer under the contract.

Assignor

The party to a contract who is assigning it to another person or company.

Attorneys Fees Clause

A contract provision that the winner of any lawsuit can recover its legal fees from the loser. Sucha clause should be used with care, and only with the advice of an attorney, because it can havesignificant and potentially extremely expensive consequences. For example, if a small company isthe loser against a large company, the small company might be required to pay enormous legal feesof a large company.

Attribution

The identification of particular person(s) as the author or creator of a Work. Many Open SourceSoftware Licenses contain Attribution requirements, meaning that the licensed software mustcontain a notice that names the author(s) of the software. For software distribution, the attribution

is contained in an “about box” in the software, or may be separately contained in a README file.

Audit Clause

A contract provision that enables a party receiving payment from the other party to audit the booksand records of the other party pertaining to the payment. This is frequently used in Royalty- bearing licenses. Such a clause often requires that the audit can be performed only on reasonable prior notice during business hours, and in the event that an audit reveals an underpayment by morethan a specified percentage, the party who underpaid also will pay for the reasonable costs of theaudit.

Autorenewal (of Contract)

A contract provision that says the contract will be automatically renewed for a certain period,unless notice of non-renewal is sent prior to renewal. Autorenewal provisions are used whencompanies desire a long-term relationship, but want to have periodic “outs” to leave therelationship if circumstances change. They can create unintended consequences. For example, if prices need to increase upon renewal, the price change formula needs to be contained in theagreement, otherwise the out of date prices may be locked into the agreement when it renews.




B

Backup Assignment

See Assignment, Backup.

Bankruptcy

In the U.S., a legal process available to a company whose liabilities exceed its assets, enabling it toconduct an orderly liquidation of its business assets or to reorganize by eliminating or restructuringclaims against it. Companies generally can file under two chapters of the U.S. Bankruptcy Code.(Title 11 of the United States Code). First, they may file under Chapter 7, which is solely for liquidation and in which an independent trustee will be appointed. Alternatively, they may fileunder Chapter 11 and the company’s management generally will remain in control. Chapter 11 can be used to conduct an orderly liquidation or to reorganize by eliminating or restructuring claims

against the company. Other legal proceedings are available to companies just short of bankruptcy.

Bankruptcy Code Section 365(n)

A statute that protects Licensees in the event that a Licensor of certain Intellectual Property rightsfiles for Bankruptcy. Contracts that are not fully performed by both parties (i.e. that are known as“non-executory“ under Bankruptcy law) are subject to “rejection“ (in other words, termination) inBankruptcy by a Bankruptcy trustee. Section 365(n) provides an exception, which benefitslicensees of certain Intellectual Property from licensors who declare bankruptcy. It permits thelicensee to keep the license as it existed at the time of the bankruptcy filing, to enforce exclusivityand, if the contract has proper legal provisions, to access supplementary rights (such as computer

source code in escrow). To keep the license, the licensee must continue to pay any Royalties provided for in the contract and the licensee cannot obtain ongoing positive performance from the bankrupt company, such as ongoing software Updates or Maintenance and Support. Section 365(n)has gaps. It covers Trade Secrets and U.S. Patents and Copyrights, but does not cover Trademarks,most other Intellectual Property or most foreign Intellectual Property, or any future improvementsand modifications (e.g. future software upgrades).

Berne Convention for the Protection of Literary and Artistic Works

An international treaty that governs Copyright rights, under which each country recognizesCopyrights of residents of other nations that have signed the treaty. Among other things, the Berne

Convention eliminates many of the requirements for formalities such as Copyright Notice andregistration. Also called Berne Convention. See the treaty text.


http://caselaw.lp.findlaw.com/casecode/uscodes/11/toc.html

http://caselaw.lp.findlaw.com/casecode/uscodes/11/chapters/3/subchapters/iv/sections/section_365.html


http://www.wipo.int/treaties/en/ip/berne/index.html

http://caselaw.lp.findlaw.com/casecode/uscodes/11/toc.html


http://www.wipo.int/treaties/en/ip/berne/index.html



Berne Convention Implementation Act of 1988

The statute under which the United States joined the Berne Convention, on March 1, 1989. Amongother things, this statute made certain copyright formalities, such as the use of a Copyright Notice,optional in the U.S. for some purposes (but they are still recommended).

Best Efforts

A level of diligence, or effort, exercised by a party in its performance of a contract. Best efforts”has different meanings, depending on whether or not it is coupled with exclusivity. “When the bestefforts obligation is coupled with an exclusive agreement, the level of diligence is akin to afiduciary obligation, .. the highest duty found in the law, comparable to what an attorney owes aclient or a doctor owes a patient.” In a non-exclusive agreement, the meaning of best efforts is notclear, and may or may not be equivalent to Reasonable Efforts or to a higher standard. J. Pink,Divining the Meaning of “Best Efforts,” California Lawyer (Jan. 2008). (The term is also used inCalifornia Uniform Commercial Code Section 2306(2) with respect to contracts for exclusive

dealing of goods.) Contrast with Reasonable Efforts.

Beta (version of software)

A release of software for end user testing, which usually includes all features, but may includeminor errors (bugs). With the growth of web services and desktop software that can be updatedover the web, some beta versions can be offered for years on end, blurring the distinction withcommercial releases. See A Long Winding Road Out of Beta, by Paul Fasta, on ZDNet. See also acomprehensive article about the Software Release Life Cycle.

Beta Agreement

A contract for an end user or other evaluator to use Beta version software for testing. Because Betasoftware generally does have errors (even if they are only minor errors), these contracts are used tolimit the liability of the company releasing the software. For proprietary software that will be publicly released later on a public launch date, beta agreements may include a Non-DisclosureAgreement, to preserve confidentiality before the launch. Open Source Software is not releasedunder a beta agreement because the Open Source Software agreements already contain liabilitylimitations and the software obviously is not kept confidential.

Bounty

A one-time payment for completing an action under a contract (such as bringing a qualified prospective customer to the other party). Compare against Revenue Share.

Breach (of Contract)

Violation of contract obligations by a party, which can result in Termination of the contract andimposition of money Damages. Lawyers focus on “Material Breach,” in other words violation of


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significant provisions of an agreement that formed the basis of the bargain of the parties. Alsoknown as Default.

Browsewrap

A type of “agreement“ to which the user agrees (or agreement is implied by law) merely byvisiting a web site. It is typically not negotiable. This type of “agreement“ has not been enforcedconsistently by the courts, so other types of agreements such as Clickwrap agreements andManually Signed agreements are more popular for important contracts.

BSD

One of the simplest, shortest and most permissive of the Open Source Licenses. It does not containa Reciprocity Clause. Also known as the Berkeley Software Distribution license. The Open SourceInitiative publishes a template for the BSD license.

Bundling and Integration (of technology)

The combination of technologies (especially computer software). Many innovative products andservices require the combination of technologies from several companies. Technology transactionsoften include requirements for technologies or computer code to be technically integrated or bundled with other material. Bunding and integration are often used as synonyms, but bundlingalso can refer to inclusion of a product on a disk or in a package without any technicalcombination.

C

California Labor Code Section 2870

A statute providing that an employee’s inventions are not Assigned to the employer if they aredeveloped entirely on the employee’s own time, and without using the employer’s equipment,supplies, facilities, or trade secret information. This does not apply, however, to inventions thateither (1) relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or (2)result from any work performed by the employee “as employee“ of the employer. If anemployment agreement with a California employee requires the employee to assign any invention,then the employer must also (at the time the agreement is made) provide a written notification to

the employee that the agreement does not apply to an invention which qualifies fully under the provisions of Section 2870. As a result, this notice generally appears in California EmployeeInvention Assignment & Confidentiality Agreements.

Carve-out

Lawyer jargon for an exception or loophole to a requirement. Some contract provisions may needone or more carve-outs to deal with special situations.


http://www.opensource.org/licenses/bsd-license.php

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http://www.opensource.org/licenses/bsd-license.php

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Choice of Forum Clause

The selection of a specific court to hear disputes concerning a contract. Though many technologycontracts include a choice of forum clause, courts may override that choice due to public policy or other reasons.

Choice of Language Clause

For international transactions in which the agreement may be translated into other languages, theagreement may specify which language governs the interpretation of the agreement.

Choice of Law Clause

The selection by the parties in a contract of a particular country’s and state’s law to govern theinterpretation of a contract. Lawyers prefer a specific choice of law in a contract so that thecontract can be interpreted clearly. If the parties reside in the same Jurisdiction, and the

contract does not have a choice of law clause, then the law where the parties reside will probably apply. If the parties reside in different Jurisdictions, then potentially two differentlaws (e.g., law of California and law of France) may apply, which may require two differentlawyers for an interpretation.

Clickwrap

A type of online agreement in which the user clicks an “I Accept” button or similar mechanism toaccept and complete the Formation of Contract. It is typically not negotiable.

Commercial Availability

The date on which a product is available in production form for sale or license to the public.Contrast this with Alpha and Beta releases, which mostly are made to a limited audience of “beta testers,” although more and more beta releases are made to the general public. Alsocalled General Availability.

Communications Decency Act (CDA)

Section 230 of the Communications Decency Act, 47 United States Code Section 230, protectsinternet content providers from legal liability (such as Defamation claims) for third-party materialsthat they publish online, as well as for liability due to filtering content. It is an important protection

to online publishers of User Generated Content.

Confidentiality Agreement

See Non-Disclosure Agreement.






Conformity (to a Specification)

The standard generally used for Acceptance of work product under an Independent Contractor Agreement, Software Development Agreement or similar agreement. The work product needs to“conform“ or meet the Acceptance requirements, which are usually written up as a Specification or

requirements document. Although some agreements use a standard of “strict“ conformity, it ismore common to use a standard of “substantial“ conformity to the Specification. This is to preventthe parties from getting stuck on minor details.

Consequential Damages

Damages that arise as an indirect result (as a “consequence”) of an act. For example, the failure todeliver a part to a factory for manufacturing could be a direct act and could result in directDamages. Shutting down the factory because there are no parts in inventory is a consequentialdamage resulting from the failure to deliver the part. California Commercial Code Section 2719(b)(3) permits the exclusion of consequential damages in most sales contracts. Consequential

damages are routinely waived in technology contracts, with a few common exceptions, using aConsequential Damages Waiver.

Consequential Damages Waiver

Many contracts include an exclusion or waiver by one or both parties of Consequential Damages,although such a waiver may contain exceptions. Such a waiver might read as follows: “IN NOEVENT WILL EITHER PARTY BE LIABLE FOR ANY SPECIAL, INCIDENTAL, PUNITIVEOR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING BUT NOT LIMITED TOLOST REVENUES, LOST PROFITS, AND/OR LOST SAVINGS, IN CONNECTION WITHTHIS AGREEMENT, EVEN IF THE OTHER PARTY HAS BEEN INFORMED IN ADVANCE

OF THE POSSIBILITY OF SUCH DAMAGES.”

Consideration

All contracts require the exchange of consideration, i.e., something of value, in order to be legallyeffective, subject to very few exceptions. This requirement appears in many contracts with thelanguage, “for one dollar and other good and valuable consideration, the receipt of which is herebyacknowledged.” Although some consideration is required, the actual amount of consideration can be very small, as small as a “peppercorn,” according to law treatises. Even an exchange of mutualCovenants can be sufficient consideration. See also Formation of Contract.

Conspicuous (disclaimer in contracts)

Under California Commercial Code Section 1201(b)(10), “‘Conspicuous,’ with reference to aterm, means so written, displayed, or presented that a reasonable person against whom it is tooperate ought to have noticed it. Whether a term is ‘conspicuous’ or not is a decision for thecourt. Conspicuous terms include the following: (A) a heading in capitals equal to or greater insize than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same or lesser size; and (B) language in the body of a record or display in larger type than











the surrounding text, or in contrasting type, font, or color to the surrounding text of the samesize, or set off from surrounding text of the same size by symbols or other marks that callattention to the language.” This is the reason why some contract language and other legaldisclaimers are in all caps type. As one blogger put it, we have “a terrible typographicdecision enshrined in the conventional wisdom of legal documents because it fits within the

safe harbor defined by a widely used statute.”

Consulting Agreement

See Independent Contractor Agreement, which shares many of the same issues and features.

Copyright

A type of Intellectual Property right that protects the “expression“ of an idea that is “fixed in atangible medium.” In plain language, this means words on paper, songs recorded on a compact discor .mp3 file, paintings on canvas, code written in a programming language stored on a hard disk, or

motion pictures on film or DVD’s, and so forth. For example, the words are the expression, and the paper is the tangible medium.

Copyright Notice

The legal notice that a Work is subject to Copyright protection. Since the U.S. joined the BerneConvention, a Copyright notice is no longer required in order to preserve a Copyright for Works published after March 1, 1989. However, use of a copyright notice still imparts many useful legal benefits. For details, see U.S. Copyright Office, Circular 1.

Counterparts

(1) In contracts, counterparts means copies of the same signature page signed separately bydifferent parties. For example, if three parties are not present to sign the same signature page, each party can sign copies of the signature page and exchange those with other parties. Each signed page is a “counterpart” copy. Contracts, particularly more complicated ones, often include a“counterparts clause“ that might read as follows: “This Agreement may be executed incounterparts, each of which will be deemed an original, but all of which together will constituteone and the same instrument.” (2) In prosecution of Patents and Trademark registrations, a“foreign counterpart” means an application to register the same rights in a different Jurisdiction.For example, a U.S. Patent application may have foreign counterpart applications in Japan andCanada.

Covenant

A legally enforceable promise to act or not take action in the future.


http://www.mslater.com/post/104847-why-are-warranty-disclaimers-in-all

http://www.copyright.gov/circs/circ01.pdf

http://www.mslater.com/post/104847-why-are-warranty-disclaimers-in-all

http://www.copyright.gov/circs/circ01.pdf



Covenant Not to Sue

A Covenant that is essentially the same as a non-exclusive license to Intellectual Property, butunlike a license, is generally personal to the recipient of the covenant and not assignable by therecipient (See also Assignment and Delegation). Covenants Not to Sue are sometimes provided in

patent transactions instead of non-exclusive Licenses. Also called a Non-Assertion Covenant.

Creative Commons

A non-profit organization that develops and provides forms of Open Content licenses and providesa means to dedicate Works to the Public Domain.

Cross-Collateralization

An approach by which amounts owed under one contract are repaid by amounts to be paid under aseparate contract. This approach is used for multiple book contracts with the same author, for

example. If an Advance against Royalties has not been Recouped for a book, the publisher mayRecoup the Advance from Royalties to be paid under the contract for a second more profitable book.

Cross-Default

Treating a default (or Breach) under one contract as a default under a separate contract. Thisapproach is often used in debt financing agreements. If a borrower under an agreement concerningits collateral for a loan breaches that agreement (e.g., sells an asset without the bank’s permission),the default under that agreement is also deemed to be a default under the loan agreement, therebyenabling the bank to demand repayment of the loan. This concept is used sometimes in complex

technology transactions where a breach of obligations in one agreement, such as a Maintenanceand Support Agreement, also results in breach of another agreement, such as a License agreement,or triggers an action under another agreement, such as release of an escrow under a Source CodeEscrow Agreement.

Cross-Indemnity

A type of Indemnity in which parties to an agreement provide an Indemnity to the other party(ies).For example, a Cross-Indemnity may be used in situations where each party is responsible for separate activities in a relationship (such as a joint venture) and that party wants to protect theother parties from any third-party lawsuits arising from those activities.

Cross-License

In one contract, the License by one party to the other, and vice versa. For example, in a PatentCross-License, each party could Grant a License the other for its entire Patent portfolio. See alsoPatent Pool.




Cure (of contract Breach)

To perform or stop performing some action so that a party to a contract is no longer in Breach.Many contracts have a Cure Period. Some breaches may not be able to be cured, such as a falserepresentation that the party was in compliance with law at the time the contract was signed.

Cure Period

The time period in a contract that a party in Breach has to Cure the Breach, after which the other party may terminate the contract.

D

Damages

The monetary amount awarded by a court (or an arbitrator) to reimburse a party to a contract dueto the other party’s Breach of the contract. The basic form of damages is to reimburse the party for “the benefit of the bargain,” the value that the party would have obtained if the contract had beenfully performed. Damages are also known as a form of “legal” relief because historically they wereawarded by a court of “law,” as compared to “equitable” relief such as Injunctions which wereissued by courts of “equity.” Also called Money Damages or Monetary Damages.

Damages, Mitigation of

A party who has suffered injury due to another person is not entitled to recover Damages to theextent the Damages could have been avoided with reasonable efforts or expenditures. For example,

a party who has been harmed by another party’s Breach cannot just “let it ride” and allow theinjury to continue.

Damages, Punitive

A monetary amount awarded to punish a party and to deter similar activities by others. Punitivedamages can far exceed the value of a contract, and thus often are covered by a Limitation of Liability in a contract. Also known as Exemplary Damages.

Dedication to the Public Domain

See Public Domain, Dedication.

Defamation, Libel and Slander

In the U.S., defamation is the communication to a third party of an untrue statement of fact (or astatement which appears to be fact rather than opinion) that confers a negative image of a person or company. Slander is defamation by spoken word, and libel is defamation by written word. In theU.S., truth is a defense to defamation, “public figures” receive less protection from defamation




than private individuals, and the Communications Decency Act (CDA) Section 230 provides someimmunity for online publishing of defamatory statements. Defamation, libel and slander are treateddifferently in Europe and the rest of the world.

Definitive Agreement

Many contracts are preceded by written documentation, such as emails, mail, Requests for Proposals (RFP’s) and Term Sheets, that are not intended to be legally binding. Those documentsare usually intended to facilitate negotiations, but not to document or memorialize the finalcontract. The final, written, legally binding contract is commonly called the definitive agreementor definitive written agreement.

Delegation

See Assignment and Delegation.

Deliverable

The work product to be delivered by one party to the other under an Independent Contractor Agreement, Software Development Agreement or the like. Deliverables are often listed andmatched up with Milestones and Payments due, under a Milestone Schedule.

Derivative Work

In Copyright law, a Work that is “based on” one or more preexisting Works. For the full U.S.definition, see 17 United States Code Section 101. In technology contracts, software and internetlaw, Derivative Works are crucial, because software and documents are extremely easy to modify

and update in electronic form, even in very minor ways, resulting in Derivative Works. The rightto make Derivative Works can be very important in Software Development Agreements and other Licenses.

Design Patent

A type of patent that protects product designs that are functional. Many patent lawyers believedesign patents are easy to design around and have low value.

Digital Millennium Copyright Act (DMCA)

The Digital Millennium Copyright Act, Public Law 105–304, Oct. 28, 1998, amended the U.S.Copyright law to add protections against circumvention of copyright protection mechanisms,see DMCA (Anti-Circumvention), and statutory immunity from Copyright infringement for certain online service providers, see DMCA (Online Service Provider Immunity).


http://www.copyright.gov/title17/92chap1.pdf


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Direct Damages

Monetary Damages from one party to the other party due to one party’s Breach of a contract.Direct damages are often subject to a Limitation of Liability in technology transactions.

Disclaimer of Warranties

Some Warranties are implied by law (Implied Warranties), even if the parties do not mention themin their contract. Implied Warranties must be disclaimed in order to eliminate them. See CaliforniaCommercial Code Section 2316. A very simple disclaimer of warranties might read: “SELLER HEREBY DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING THE IMPLIEDWARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.”

DMCA (Anti-Circumvention)

The Digital Millennium Copyright Act (DMCA) conveys copyright law protections to

technological measures (such as encryption) that control access to copyrighted Works, such asmovies on DVD and software. This is called “anti-circumvention”; in other words, it prohibitscracks and workarounds to the protection measures. The DMCA also contains limited exemptionsto permit circumvention for purposes of Reverse Engineering for Interoperability.

DMCA (Online Service Provider Immunity)

The Digital Millennium Copyright Act (DMCA), Section 512 of the U.S. Copyright law, providesfor immunity from copyright infringement to online service providers who register a designatedagent with the U.S. Copyright Office and who follow statutory procedures when they receive acomplaint of copyright infringement. Section 512 provides significant protections to online

businesses and web site operators who publish User Generated Content on their sites.

Documentation

Documents that accompany software or other technology and explain how to use it. Many timesdocumentation is overlooked or not handled properly in technology transactions. In other cases, itis simply swept up in the definition of technology or software in the agreement.

Downtime

The time period during which an online system is not available for productive use by customers.

Scheduled Maintenance is often excluded from measurements of downtime




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E

Electronic Signatures

Signature of an agreement using an electronic device or electronically enabled method, as opposedto a Manual Signature (or “wet” signature). Electronic signatures are governed by, amongother things, the Electronic Signatures in Global and National Commerce Act (or E-Sign Act),a U.S. federal law, and the Uniform Electronic Transactions Act (UETA), a law adopted bymany U.S. states. The federal and state laws overlap in many respects.

Electronic Signatures in Global and National Commerce Act (E-Sign)

A federal electronic signature law, which partially preempts the state law governing electronicsignatures, codified at 15 United States Code Chapter 96.

Employee Invention Assignment and Confidentiality Agreement

A type of agreement very common in Silicon Valley in which an employee discloses prior inventions, assigns any Inventions and Works made during employment to his/her employer (subject to California Labor Code Section 2870), and agrees to hold confidential any informationof his/her employer.

End User License Agreement (EULA)

An agreement by which a publisher (such as software publisher) licenses to end users the right touse software and disclaims certain liabilities. Historically these were Shrinkwrap agreements, but

now are moving to Clickwrap agreements, as the distribution of software migrates from offlineretail channels to online. EULAs typically are not negotiated. In most cases, Enterprise Licenseagreements and high priced end user licenses still are negotiated with a Manual Signature.

Enterprise License

An agreement to License use of technology (especially software) to an entire company and/or itsAffiliate companies. Contrast with Site License and Per-Seat or Concurrent User License.

Entire Agreement Clause

Contract provision in a Definitive Agreement that states that the Definitive Agreement supersedesall prior documents, discussions and negotiations, and that the Definitive Agreement contains the“entire agreement” of the parties.

Epidemic Failure

A failure that applies in common to multiple units of a product, as opposed to isolated failures.






Equitable Relief

A type of relief issued by a court. The main type of Equitable Relief is an Injunction. Contrast withDamages.

Escalation

(1) In complex contracts or contracts with large companies, an escalation process is used so thatdisputes are discussed and resolved by senior executives before either party commencesArbitration or goes to court. (2) In Support provided by a customer call center (or contact center),an escalation process is used to raise customer problems through various tiers of support personnelfor resolution.

Escrow

See Source Code Escrow.

Escrow Release Trigger Events

In software licensing, the events that trigger the release of a Source Code Escrow. The events caninclude bankruptcy, insolvency, ceasing to operate the business, ceasing to offer the licensed product, or ceasing or defaulting in the support of the licensed product. Some escrow releasetrigger events may be problematic under U.S. Bankruptcy Law.

Evergreen Contract

See Autorenewal.

Exclusivity and Non-Exclusivity

An exclusive License is a Grant of rights to Intellectual Property that is limited to only onecompany or person. A non-exclusive License is a Grant of rights to Intellectual Property tomultiple companies or persons. A license grant may be considered “semi-exclusive” or “limitedexclusive” when a company grants exclusivity to a limited number of other companies or persons,instead of a single company or person. It is good practice to specify whether a License Grant isexclusive or non-exclusive. It is also essential to avoid overlaps in exclusive and non-exclusiveLicense Grants. To avoid overlaps, exclusivity may be limited to a particular country or other territory, by Field of Use, or in other ways.

Exemplary damages

See Punitive Damages.




Exhibits and Schedules

The attachments to a contract. The terms are often used interchangeably, although exhibits tend to be form agreements, policies and longer documents, and schedules tend to be shorter lists of information, exceptions and other brief information.

Expiration of Contract

The ending of rights and obligations of a contract when its term expires, either as specified by thecontract or by law.

Export Control

Software containing encryption functionality and other sensitive technologies may require anexport license pursuant to U.S. law, before being shipped to specified countries or even certainforeign nationals within the U.S.

F

Fair Use

Exceptions to the exclusive rights provided by Copyright law, for example for scholarly or criticaluses. In the U.S., fair use is defined by four factors in the U.S. Copyright Act, 17 United StatesCode Section 107, as well as court cases.

Field of Use

A provision in a License that limits the exercise of the License to certain uses (e.g., for use withcertain types of equipment but not with others, such as home audio equipment versus professionalaudio equipment used in theaters). Most often used in Patent Licenses.

Force Majeure

An event or condition that prevents one or both parties from performing the contract, such as war,epidemic or failure of communications facilities. Force Majeure may excuse a party’s non- performance under the law and if specified under a contract.

Formation of Contract

Three elements are needed to form a contract: (a) an offer by one party of all Material terms to acontractual relationship; (b) clear acceptance by the other party(ies) of the offer; and (c) anexchange of Consideration. There are a few exceptions to this general rule, but they generallydon’t apply to technology transactions.









FOSS

Free and Open Source. A more precise and lawyer-like word for Open Source Software. (Althoughthe term “Open Source Software” does not necessarily include code other than source code, i.e.,object code, this glossary uses Open Source Software interchangeably with FOSS, for ease of

understanding by readers.) See Open Source Software.

FOSS License

See Open Source License.

Further Assurances Clause

An agreement by one party to take further actions requested by another party. It is used in shortterm agreements or short form Assignments in case one party needs future assistance from theother party. For example, a further assurances clause is used in an Independent Contractor

Agreement or Assignment of Intellectual Property in case the hiring party needs the contractor tosign a document (such as a patent application) after the project is completed.

G

General Availability

See Commercial Availability.

GNU General Public License (GPL)

A well-known Open Source License that includes a Reciprocity Clause. Many leading OpenSource Software programs are licensed under the GNU General Public License (GPL), or itsrelated license for code libraries, the GNU Lesser General Public License (LGPL), also known asthe Library Public License. Despite such popularity, corporate users of GPL software are wary of the possible impact of the Reciprocity Clause on their businesses.

Governing Law

See Choice of Law Clause.

Government Contracts

Under U.S. federal contract law such as the Federal Acquisition Regulations (FAR) and DefenseFederal Acquisition Regulations Supplement (DFARS), the federal government may obtainrestricted rights, government purpose rights or unlimited rights to Intellectual Property. It isimportant for a government contracts lawyer to review government contracts and advise onrestrictive rights legends for Software, Documentation and other licensed technology, to ensurethat the proper language is used for desired level of rights to be Granted.


http://www.fsf.org/licensing/licenses/gpl.html


http://www.fsf.org/licensing/licenses/lgpl.html


http://www.fsf.org/licensing/licenses/lgpl.html



Grant

The voluntary passing over of Intellectual Property rights from one party to the other. It is best tospecify the Intellectual Property rights granted such that they match up as desired to the rightscreated by law. For example, the holder of a Patent has the right to exclude others from making,

using, or selling products or processes covered by the patent. A grant can match up to one or moreof those rights. Likewise, the holder of a copyrighted Work can control the rights to copy,distribute, publicly display, public perform, transmit, and create Derivative Works of, thatcopyrighted Work. A grant can match up to one or more of those rights, for example, grant a rightto copy and prepare Derivative Works internally, but not to distribute, publicly perform or publiclydisplay the Work.

Grant Back

If Intellectual Property rights are Assigned from an Assignor to an Assignee, the Assignee maygrant back (i.e., grant a License back) to the Assignor so that the Assignor can use some of the

rights that were Assigned. An analogy (using tangible property and not Intellectual Property)would be for me to sell my car to you, with the understanding that you will let me drive it onSaturdays. Also called a license back.

Granting Clause

The provision in a License agreement in which Intellectual Property rights are Granted by one party to the other. This is often the core clause in a License agreement.

Gross Revenue

The total money or other value received by a party in connection with the sale or licensing of a product or service. Under a Royalty-bearing License agreement, Royalties can be calculated basedon Gross Revenue, and Royalty participations on that basis are done in deals in the Hollywoodmotion picture and entertainment industry. Royalties based on gross revenues are very rare intechnology transactions.

Guaranty

A promise made by a person or company (such as a parent company, and known as the guarantor)to answer for the obligations of another party (such as a subsidiary). Loans to or contracts madewith small companies may require a personal guaranty by the founders of the company.




H

Hit

The number of requests for a file from a web server, for example, to display various files as part of a web page. Because a web page can consist of many files and can trigger file requests from manydifferent web servers, and because many of those files are trivial (such as minor graphics), hits arenot a reliable measurement of traffic to a web site.

Hyperlink

An approach to cross-referencing two documents or files (or the content within them), which isimplemented by technology. The most well-known type of hyperlink is the HTML hyperlink usedon web pages, and also available in word processing and Adobe pdf documents. For example, seethe specification of hyperlinks described in T. Berners-Lee and D. Connolly, “Hypertext Markup

Language - 2.0 (RFC 1866).” Contrary to popular belief, HTML is not the only way to implementhyperlinks. There is also a broad but little-known hyperlinking protocol based on ExtensibleMarkup Language (XML) called XML Linking Language, or XLink . The concept of hyperlinks precedes the development of the world wide web by decades, originating in the work of computer pioneer Vannevar Bush (by his essay “As We May Think” published in The Atlantic magazine)and as further developed by digital visionary Ted Nelson and his Xanadu Project. Also called aLink.

Hyperwrap Agreement

A type of agreement in which the terms and conditions are incorporated via a Hyperlink. The

Hyperlink needs to be sufficiently obvious that it is is legally “Conspicuous” to the parties. SeeEnter the Hyperwrap Agreement.

HTML

Acronym for Hypertext Markup Language. It is the main approach for coding text and other content for use and reading on web pages via web browsers.

I

Incidental Damages

Damages that are in addition to the main Damages due to contract breach. Incidental damagessuffered by a seller of goods due to a buyer’s breach “include any commercially reasonablecharges, expenses or commissions incurred in stopping delivery, in the transportation, care andcustody of goods after the buyers’ breach, in connection with return or resale of the goods or otherwise resulting from the breach.” California Commercial Code Section 2710. Conversely,Incidental damages suffered by a buyer of goods due to a seller’s breach “include expenses


http://tools.ietf.org/html/rfc1866#page-36






http://en.wikipedia.org/wiki/XLink

http://www.xanadu.com/



http://boadweelaw.com/enter-the-hyperwrap-agreement

http://wiki.creativecommons.org/FAQ#What_does_the_Creative_Commons_.E2.80.9CSome_Rights_Reserved.E2.80.9D_button_mean.3F_What_does_a_Creative_Commons_license_do.3F





http://en.wikipedia.org/wiki/XLink


http://boadweelaw.com/enter-the-hyperwrap-agreement




reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfullyrejected, any commercially reasonable charges, expenses or commissions in connection witheffecting cover and any other reasonable expense incident to the delay or other breach.” CaliforniaCommercial Code Section 2715(1). Such damages generally are understood to be less significantthan Consequential Damages.

Indemnity

A “contract by which one engages to save another from a legal consequence of the conduct of oneof the parties, or of some other person,” as defined in California Civil Code Section 2772. Mostoften, this means protecting a third person from a lawsuit by payment of money. It can also includeother actions, such as assuming the legal defense of a lawsuit. Here is the usual case. By contract,one party (first party) can provide indemnity to the other party (second party) to cover the second party for claims and lawsuits by other persons against the second party arising from the first party’s acts or omissions. The indemnity would require the first party to defend against thoseclaims and lawsuits against the second party (e.g., by hiring and paying a lawyer to handle the

defense), and to pay any damages, arbitration awards and settlement amounts that the second partywould otherwise have to pay to the third person. Because indemnities provide for financialcoverage for claims by others, they are similar to insurance. Indemnities are often hotly negotiated by lawyers, to the confusion of clients who don’t understand that indemnities can result in hugecosts and liabilities. Also called Indemnification.

Indemnitor

The party who provides Indemnification. Also called an indemnifying party.

Indemnitee

The party who receives Indemnification. Also called an indemnified party.

Independent Contractor

An entity or a person who performs work for someone other than an employee. Taxing authoritiesuse a multiple factor test to determine whether a person is an employee (withholding taxes and benefits must be paid) or an independent contractor (these taxes and benefits are not paid).

Independent Contractor Agreement

An agreement between a hiring party and a person or entity performing work for the hiring party.The agreements generally include a description of the work timetable and requirements, a grant or transfer of rights of the work product to the hiring party (which most often is a Work Made for Hire arrangement), representations and warranties, required insurance and Limitations of Liability.The specific Deliverables, Acceptance criteria, Milestone Schedule and Payments due for a projectoften are listed on a Statement of Work attached to the agreement. Complicated or long termengagements may include several Statements of Work.





http://www.leginfo.ca.gov/cgi-bin/displaycode?section=civ&group=02001-03000&file=2772-2784.5



http://www.leginfo.ca.gov/cgi-bin/displaycode?section=civ&group=02001-03000&file=2772-2784.5



Indirect Damages

See Consequential Damages.

Industrial Designs

Intellectual property protection available in various countries for design elements of functional products. See also Design Patent.

Inflation Adjustment Clause

A provision in a contract by which the pricing is automatically adjusted for inflation. In long termcontracts, this enables the parties to provide for some automatic pricing adjustments withoutresorting to complicated formulas or renegotiating the price. The adjustment is often based onchanges to the Consumer Price Index (CPI), but sometimes is based on changes to the Producer Price Index (PPI).

Infringement

The unauthorized exploitation of Inventions or material that is protected by Intellectual Propertylaw (particularly Patent, Trademark or Copyright law), in a manner that violates one of the legalrights to such Inventions or material.

Injunction

An order by a court to take or not take an action required by a court. Violation of an injunction is aserious matter, and can result in fines and even jail time for criminal contempt of court. Because of

the power of an injunction, contracts often specify this relief only for breaches of confidentiality or to stop infringement of Intellectual Property rights. InsuranceRequired insurance can includegeneral liability insurance, workmen’s compensation insurance, errors and omissions insurance, aswell as umbrella liability coverage.

Integration (of contracts)

The combining of several contract documents together into a single legal instrument with a singleinterpretation. In many cases, the documents will specify which documents and contract provisionsgovern in case of conflicts among the documents.

Integration (of technology)

See Bundling and Integration (of technology).

Intellectual Property

Legal rights to intangible property such as Patents, Trademarks, Copyrights, Trade Secrets, MoralRights and Industrial Designs. Intellectual Property rights may exist due to statutes or common law


http://www.bls.gov/cpi/

http://www.bls.gov/ppi/


http://www.bls.gov/cpi/





(law arising from judicial decisions in court cases). Generally, Intellectual Property rights arespecific to each Jurisdiction (for example, U.S. and German Patent rights are separate).

Internal Use

A limitation in a License so that a licensee may utilize the rights (such as copying and distribution)within its organization, but not for distribution, performance or display to customers or the public.

Interoperability

The ability of multiple devices, computer software programs, or systems to work together. In theU.S., it is defined as “the ability of computer programs to exchange information, and of such programs mutually to use the information which has been exchanged,” for purposes of ReverseEngineering, in the Digital Millennium Copyright Act (DMCA), 17 United States Code Section1201(f) (4). See also DMCA (Anti-Circumvention).

Invention

Any “art or process (way of doing or making things), machine, manufacture, design, or composition of matter, or any new and useful improvement thereof, or any variety of plant, whichis or may be patentable under the patent laws of the United States,” according to the U.S. Patent &Trademark Office Glossary.

IP

See Intellectual Property.

Ipso Facto Clause

A contract clause that says the contract can be terminated or modified by one party if the other party files for bankruptcy. Under the U.S. Bankruptcy Code, this clause is generally notenforceable. For example, if the ipso facto clause is a trigger for termination, the bankruptcy courtwould not permit termination.

Irrevocable

Cannot be terminated despite subsequent events. This term is often used in Granting Clauses of License agreements.





http://www.uspto.gov/main/glossary/index.html#invention









J

Joint Ownership

Ownership of an asset, such as a Patent, by two or more parties In some technology transactionswhere the value involved merits it, it may be better to take joint ownership of the IntellectualProperty instead of a License, for example if Bankruptcy is a concern. Also, the parties shouldspecify whether each party has an obligation to account to the other for any licensing or other revenues from the jointly owned asset, and the parties also should agree on rights, responsibilitiesand cost sharing for filing of any Patent applications and filing lawsuits to enforce the patents.

Jurisdiction

(1) The territory over which a political, governmental or supra-governmental power exercises legalauthority. (2) The territory or topic area over which a court exercises its legal authority. See also

more than you want to know about jurisdiction. Intellectual Property lawyers will speak of “jurisdictions” in contracts rather than “countries,” because Intellectual Property rights areconferred by many different legal authorities. For example, trademark rights can be conferred by(or their legal rights can be registered with) U.S. states, the U.S. federal government, and supra-national organizations such as the European Union (EU). “Jurisdiction” then becomes a handysingle term to refer to these various legal authorities.

K

Know-How

Knowledge and data required to do or make something, particularly business or manufacturing processes or technical equipment. It can include formulae, designs, drawings, procedures andmethods, as well as accumulated skills and experience of technical and engineering personnel, e.g.,knowledge of how to “fine-tune” a machine or adjust a manufacturing process for optimal results.Know-How generally is protected as a Trade Secret by means of a Non-Disclosure Agreement.Also called knowhow.

L

Lanham Act

The U.S. Trademark Act, a federal law, codified at 15 United States Code, Chapter 22. It restrictsTrademark Infringement, Trademark dilution and false advertising, among other things.


http://www.answers.com/topic/jurisdiction

http://www4.law.cornell.edu/uscode/15/usc_sup_01_15_10_22.html

http://www.answers.com/topic/jurisdiction

http://www4.law.cornell.edu/uscode/15/usc_sup_01_15_10_22.html



Legal Relief

See Damages. Contrast with Equitable Relief.

Liability Cap

A limit on the Damages that one party can recover against the other in event of Breach of acontract by the other Party. Sometimes called a dollar cap or a ceiling on Damages. This is mostoften stated as a dollar amount or a formula, for example, limiting liability to “amounts paid or payable under this agreement.”

Libel

See Defamation, Libel and Slander.

License

A permission, such as a permission to use an asset, such as Intellectual Property. Contrast thelimited permission by a license with the all-encompassing transfer of rights by an Assignment.

Limitation of Liability

A limit on the Damages that one party can recover against the other, which may include both aLiability Cap and a Consequential Damages Waiver.

Liquidated Damages

Specifying a dollar amount of Damages in advance, because the calculation of Damages wouldotherwise be difficult or impossible. Under general contract law, liquidated damages that areintended as penalties or are unduly high in order to punish the other party are not enforceable.Liquidated damages are rare in technology transactions, except for minor infractions in servicelevel agreements.

Localization

Adaptation of a product to meet a local country’s laws, language and customs (e.g., local currency)and customer preferences. Typically, a localization would be a Derivative Work of the underlyingWork.

M

Maintenance and Support

Updates made and distributed to software after release to correct problems, improve performanceor adapt the software to a different environment (e.g., to newer versions of an operating system or




other software). May be provided remotely by telephone, web, or email or on-site. Often supportcases or incidents are entered into an online trouble ticket system for tracking and resolution. Mayinclude minimum Response Time for support assistance. Support to end user customers may be provided by different personnel as Tier 1 (First Level), Tier 2 (Second Level), and even Tier 3(Third Level) or higher. Generally, Tier 1 support refers to support provided directly to an end

user, most often over the telephone, and Tier 2 and Tier 3 support refer to support provided by product development and engineering staff to the Tier 1 support personnel, sometimes withdiscussion directly with the end user customer. Tiered support is a way to triage issues by severityand to allocate different levels of expertise in resolving issues.

Maintenance and Support Agreement (or Plan)

A contract to provide Maintenance and Support of software, particularly for enterprise software. AMaintenance and Support Agreement for consumer software often will be sold as a pre-packaged plan.

Maintenance Fees

Fees for Maintenance and Support of software, typically on a subscription basis. For example, anannual subscription that uses a flat fee or a fee based on a percentage of the price of theunderlying software license.

Maintenance, Scheduled

Maintenance that has been scheduled in advance, typically for an online remote system duringrecurring off-peak times (such as Sunday nights between 1:00 am to 4:00 am), in order to minimizeimpact on end users during business hours.

Manual Signature

A signature in ink by hand, the old fashioned way. Also called a wet signature. Manual signaturesmay be accompanied by an Acknowledgement (notarization).

Mask Work

A type of protection for integrated circuit etching masks under the Semiconductor Chip ProtectionAct of 1984, 17 United States Code, Chapter 9. This right is often included in comprehensivedefinitions of Intellectual Property, but has little importance or relevance beyond the

semiconductor industry.

Material, Materiality

Lawyer jargon for “important” or “significant.”


http://caselaw.lp.findlaw.com/casecode/uscodes/17/chapters/9/toc.html









Mutual Obligations

Obligations that apply equally to both parties. Some negotiators like contracts to contain mutualobligations to prevent one party from gaining an unfair advantage. If one party faces uniquecircumstances, then there may be good reasons not to have mutual obligations.

N

Natural Intellectual Property

Practical control of access to an asset, regardless of any intangible legal rights. The concept iscaptured by the old (and often inaccurate) proverb that “possession is nine-tenths of the law.”

Net Revenue

Generally defined as Gross Revenue less specified deductions, such as refunds, returns, discounts,distribution fees and the like. Net sales is a similar concept.

Non-Assertion Covenant

See Covenant Not to Sue.

Non-Competition Clause

A contract provision in which a party agrees not to compete with the other party, possibly withindefined businesses and territories. Non-competition clauses are generally considered to be based on

a pure contractual agreement, not on underlying Intellectual Property law. As such, non-competition provisions are void in California (with exceptions), per California Business andProfessions Code Sections 16600 to 16602.5. Certain types of non-competition restrictions can be based on underlying Patent law or Trade Secret law, such as an Exclusive License of Patents or Trade Secrets in which the Licensor does not retain any rights.

Non-Disclosure Agreement (NDA)

An agreement in which one or both parties may disclose their confidential information and TradeSecrets to the other, and the other agrees to keep it confidential and not to use it for any purposeexcept the purposes specified in the NDA (such as evaluation of a potential business relationship).

NDA’s may also require that the existence and terms of the NDA itself also be kept confidential. Afully signed NDA is often a precondition to any detailed discussions or negotiations of atechnology transaction. Also called a Confidentiality Agreement. A Non-Disclosure covenant mayalso appear as a section within a license or other agreement, even if there is no separate NDA.


http://caselaw.lp.findlaw.com/cacodes/corp/1100-1113.html






Non-Exclusivity

See Exclusivity and Non-Exclusivity.

Non-Solicitation Clause

An agreement of one party not to solicit the employees, consultants, suppliers or customers of theother party for employment or business. Unlike Non-Competition Clauses, non-solicitation clausesgenerally are enforceable in California.

Notarization

See Acknowledgement.

Notice of Breach

Contracts often require a written notice of Breach so that the party in Breach is aware of theBreach and has the opportunity to Cure it within the Cure Period.

O

Object Code

Computer program code in machine readable form, and typically not in human readable form.Some contracts refer to object code as binary form.

Offer

An expression or action by a person seeking a contract (offeror), made to the person with whomthey desire the contract (offeree), conveying a desire for a contract and the material terms on which(offeror) would be legally bound.

Open Content

Content, such as text, audio or video, that is made available under a License similar to an OpenSource License, i.e., with minimal restrictions on the right to use, distribute and prepare DerivativeWorks.

Open Content License

A License to Open Content. Popular Open Content Licenses include the Licenses available fromCreative Commons as well as the GNU Free Documentation License which is used by theWikipedia online encyclopedia. (There is also a specific form of license named the “Open ContentLicense”).


http://www.creativecommons.org/

http://caselaw.lp.findlaw.com/cacodes/bpc/16600-16607.html


http://wikipedia.org/

http://opencontent.org/opl.shtml



http://www.creativecommons.org/


http://wikipedia.org/







Patent Pool

An organization in which several Patent owners agree to license their Intellectual Property to theorganization (or directly to one another), either without charge or for a royalty.

Patent

Rights granted by statute to inventors, enabling them exclude others from making, using or sellingthe Invention claimed in the patent. Patents require a written application and a review process byU.S. Patent and Trademark Office (www.uspto.gov). They also require expensive search,application and maintenance fees. The rights are valid in the U.S. only for 20 years after theapplication filing date. After that date, the rights go into the public domain and cannot be extended.(Inventors also can file corresponding applications, and pay additional government fees, to register their patents in many other countries around the world.) Often defined also to include applications,continuations, continuation-in-part (CIP), divisions, extensions, reissuances, and renewals.

Payments

In Software Development Agreements and Independent Contractor Agreements, payments may belinked to performance of certain Milestones or to Acceptance of Deliverables after they aredelivered to and tested by the hiring party.

Per Incident

Often used in support plans, in which payment for support is made per incident. An single incidentmay cover a group of related issues, but it also may be defined somewhat arbitrarily based onactual experience.

Perpetual

Forever. A term used to specify the duration of a License.

Per-Seat or Concurrent User License

A pricing formula in enterprise Licenses for a certain number of users, who are not individuallynamed and who may change from time to time. This enables a Licensee’s staff to share thelicensed resources to a certain degree.

Personally Identifiable Information (PII)

Information that may be used to identify an individual person and that may describe sensitivematters for that person, such as financial or medical information. In the California security breachnotification statute, California Civil Code Section 1798.29(e) defines “personal information” as“an individual’s first name or first initial and last name in combination with any one or more of thefollowing data elements, when either the name or the data elements are not encrypted (1) Socialsecurity number. (2) Driver’s license number or California Identification Card number. (3)


http://www.uspto.gov/

http://caselaw.lp.findlaw.com/cacodes/civ/1798.25-1798.29.html

http://www.uspto.gov/

http://caselaw.lp.findlaw.com/cacodes/civ/1798.25-1798.29.html



Account number, credit or debit card number, in combination with any required security code,access code, or password that would permit access to an individual’s financial account. (4) Medicalinformation. (5) Health insurance information.” It goes on to define “medical information” as “anyinformation regarding an individual’s medical history, mental or physical condition, or medicaltreatment or diagnosis by a health care professional” and “health insurance information” as an

individual’s health insurance policy number or subscriber identification number, any uniqueidentifier used by a health insurer to identify the individual, or any information in an individual’sapplication and claims history, including any appeals records.”

Privacy Policy

A written policy, which is usually legally enforceable, governing the online collection and use of Personally Identifiable Information, among other things. The California Online Privacy ProtectionAct of 2003 requires operators of commercial web sites and online services that collect “personallyidentifiable information” (as defined) from individual consumers residing in California to postconspicuously a privacy policy on specified pages of their sites (including the home page).

Privacy Safe Harbor

A framework developed by the U.S. Department of Commerce and the European Commission(“EC”) for U.S. companies to demonstrate that they handle personal data in compliance with the“adequacy” standard for privacy protection under the EC’s Directive on Data Protection.According to the U.S. Department of Commerce, participation by businesses is voluntary, participants may avoid interruptions or prosecution by European authorities under European privacy laws, and they must agree to privacy requirements for notice, choice, access, andenforcement, and must state publicly that they adhere to the safe harbor. See U.S. Department of Commerce Safe Harbor Overview.

Proprietary Rights Notices

Notices on a Work of claims to Intellectual Property rights, such as Patents, Copyrights andTrademarks. In contracts, parties are often required not to deface or remove the Proprietary Rights Notices from a Work, because doing so might impair the legal protection of the Work.

Public Domain

Intellectual Property (and in particular, Copyrights) that is not protected by Intellectual PropertyLaws, and thus not owned or controlled by anyone. Instead, it is considered “public property” for

use by anyone.






http://www.export.gov/safeharbor/eg_main_018236.asp








Public Domain, Dedication to

A deliberate act that causes a Work or Invention to lose its Intellectual Property protection andtherefore become part of the Public Domain. The act of dedication may be different for varioustypes of Intellectual Property.

Public Domain Works

Works that are in the Public Domain, and therefore available for use by anyone. However, due todifferent legal protections in different countries, a Work may be in the Public Domain in onecountry, while not being in the Public Domain in another country.

Punitive Damages

See Damages, Punitive.

QQuality Control

A contractual requirement to maintain the quality of goods and services to a specified standard or at least a reasonable standard. Quality Control provisions are required in licenses of Trademarks, otherwise the Trademark owner’s legal rights to the Trademark may bediminished or lost altogether.

RREADME directory or file

A directory or text file often included in software distributions, which, in the tradition of Alice in

Wonderland by Lewis Carroll, instructs the user to read it. README directories often containLicenses or Attribution notices for Open Source Software.

Reasonable

Lawyer jargon for an “objective” standard, meaning it is determined by a judge or a jury, as

opposed to a “subjective” standard determined by a party itself. The word “reasonable” is used incontracts to address minor differences without resorting to pages and pages of legalese.

Reasonable Efforts

A level of diligence, or effort, exercised by a party in its performance of a contract. This is the basic level of diligence used to perform a contract. Contrast with Best Efforts.




Reciprocity Clause

A provision in an Open Source License which requires that, in order to receive a License to theOpen Source software, any changes made and distributed to the Open Source Software must also be licensed under the same License. The best example is the GNU General Public License (GPL).

There is no charge to receive a license to software licensed under the GPL, and that licensedsoftware can be freely changed. However, if the changes are distributed, the GPL requires that thechanges also must be licensed under the GPL, which means that other people have the free right touse, modify and distribute the changes. Also called a Reciprocal License Clause.

Recording

The filing of a legal document with a government filing office, and acknowledgement of same bythat office, often to create legal proof of the time of filing. It is often recommended to recordexclusive licenses of Patents, registered Trademarks and Copyrights. Also called Recordal.

Recoupment

In simplified terms, withholding funds from ongoing payments in order to recover earlier overpayments. The term originates from Bankruptcy law, in which creditors of a bankruptcompany seek to withhold current payments in order to recover earlier overpayments (whichotherwise would not be recoverable in bankruptcy). In contrast to setoff (another term fromBankruptcy), recoupment refers to payments within the same transaction or contract. In licensingtransactions, the recoupment concept applies when a licensee (such as a book publisher) makes an“advance against Royalties” to a licensor (such as a book author), and then withholds future payments (e.g.,royalties on book sales), until the advance is recouped, or “earned out.”

Refund

Returning money or other consideration that has already been paid. Specifying that payments arerefundable, or requiring refunds after a long period (such as a lengthy guarantee), can result inrevenue recognition issues for the vendor under accounting rules.

Registered User (of registered Trademark)

Certain countries outside the U.S. require all Licensees of registered Trademarks to be registeredwith the government of that country.

Remedies

(1) In technology contracts, remedies are often specified and limited to repair, replacement (or for services, reperformance) or refund. May also include cost of replacement. In some cases,indemnities may be the sole remedy for errors that impact third parties. (2) In legal terms, a generalterm encompassing both Legal Relief (Damages) and Equitable Relief (Equitable Relief).

Representations and Warranties








Representations are statements as to a past or existing fact, a snapshot at a particular time.Warranties are ongoing promises that a fact will remain true over time.

Request for Proposals (RFP)

A written document used in procurement to request vendors to make detailed bids, which ofteninclude draft contracts.

Reservation of Rights

See All Rights Reserved and Some Rights Reserved.

Residuals

A contract exception intended to protect a party against claims that its staff has misusedconfidential information. Residuals may be defined as “information in non-tangible form that may

be retained in the unaided memories of persons who have had access to the confidentialinformation.” Common examples in which a residuals clause would be useful are knowledgegained by reviewing source code or detailed technical information.

Response Time

A term used in Maintenance and Support Agreements to specify the time period in which thecompany providing Maintenance and Support must respond to a problem request.

Revenue Share

A Payment formula in which parties agree to share in the ongoing revenue (usually Net Revenue)from a customer or other source of revenue. Contrast with Bounty. Often abbreviated as “RevShare.”

Reverse Engineering

Analysis of a device or computer software to determine how it functions. Although reverseengineering may be an Infringement of Intellectual Property rights, in order to promotecompetition, certain laws permit reverse engineering for purposes of Interoperability with other devices or software. In the U.S., the Digital Millennium Copyright Act (DMCA) prohibitscircumvention of access controls to Copyrighted Works (e.g., unauthorized breaking of passwords

or encryption), but it contains an exception to permit circumvention for purposes of enablingInteroperability with an independently created computer program. See 17 United States CodeSection 1201(f). . See also DMCA (Anti-Circumvention). In Europe, the Computer ProgramsDirective (changes pending as of May 2009) permits some reverse engineering for Interoperability.Because technology contracts often try to prohibit the licensee from reverse engineering thelicensed devices or software, it is important to know that there are legal limitations to those prohibitions.











Right of Last Refusal (ROLR)

A contract right under which the ROLR holder has the right to match the last third-party offer made to the owner of an asset. Compared to a Right of First Refusal, the holder gets the last wordon any offer. Rare.

Right of Paternity

The Moral Right of a creator to receive proper Attribution for a Work that he/she created.

Royalties, Minimum

An amount that is payable regardless of whether sales were sufficient to generate that amount inroyalties during the period. Minimum royalties are a means for a Licensor to obtain someminimum payment, while retaining some rights to upside revenue when the actual Royaltiesexceed the minimums.

Royalties, Minimum Working Clause

A contract requirement to generate the amount of sales that will result in Minimum Royalties, andif not, the License will terminate. This provision is more difficult for the Licensee to meet thanMinimum Royalties. Minimum Royalties can be paid whether or not the sales are there, and theLicensee can continue to “buy” the License, even if the Licensee puts in minimal effort to achievean upside. With a Minimum Working Clause, the Licensee must put in the sales effort, and not just pay the Minimum Royalties, which is more likely to result in Royalties on the upside.

Royalties, Running

Royalties that are accounted and paid periodically (such as monthly or quarterly), based on productsales or the like. Running royalties based on a percentage of the Net Revenue of a product are verycommon in Licenses.

Royalties

Compensation for the right to exercise Intellectual Property rights. Royalties most often connotesRunning Royalties, but also may include Minimum Royalties.

SScheduled Maintenance

See Maintenance, Scheduled.




Schedules

See Exhibits and Schedules

Self Help

The ability of a party to retrieve assets or obtain remedies by taking practical business action. Self help can be legally problematic if it results in breach of the peace (e.g, violent repossession of tangible property); or if it has not been disclosed or agreed in advance (e.g., use of timers or accessmechanisms to remotely “shut down” a computer system used by a customer who has not paid).

Sell-Off Period

Used in licenses in which physical products are produced (e.g., audio CDs or printed paper books).The licensee may have a limited time period after termination of a License agreement to continueto complete work in process (in other words, the products in the manufacturing pipeline) and sell

off the work in process and inventory. Also called Wind-Down Period.

Service Level Agreement (SLA)

A Covenant in a contract to provide a level of service (LOS) to meet a specified metric. Anexample would be a minimum Uptime Guarantee for a web service. Service level agreements oftenare not free-standing agreements, but instead are contained within Maintenance and SupportAgreements or other service agreements.

Set-Off

In simple terms, withholding of payments under one transaction, contract or circumstance in order to recover debts owed under another transaction, contract or circumstance. Set-off rights aregenerally part of the law, such as California Code of Civil Procedure Section 431.70 , andgenerally are not stated in technology contracts. Cross-Collateralization can be viewed as a type of explicit set-off in a contract.

Severability Clause

A contract provision that confirms a court’s power to delete or even modify terms in a contract thatare illegal or unenforceable. Sometimes referred to as a “blue pencil“ clause particularly for non-competition agreements, because editors at one time used blue pencils to markup text being edited.

Severity Level

The importance of an error in a technology product or service, which then may determine therequired Response Time and level of effort to remedy the error. Used in Maintenance and SupportAgreements.


http://caselaw.lp.findlaw.com/cacodes/ccp/431.10-431.70.html

http://caselaw.lp.findlaw.com/cacodes/ccp/431.10-431.70.html



Shrinkwrap Agreement

A type of agreement developed for personal computer software sold offline, in which the end user agrees to the agreement by the act of breaking the shrinkwrap or other packaging. It is typically notnegotiable. This type of agreement becomes less and less important as software distribution

migrates to the web, where Clickwrap and Browsewrap agreements are common.

Single Point of Contact (SPOC)

A person appointed by a party to a contract to be the contact person for interactions with the other party. A single point of contact is especially important when two large organizations need tocommunicate with each other efficiently. The most complex agreements may even include severalsingle points of contact in different areas, such as customer support, engineering, and legal, as wellas a main business contact. Colloquially spoken of as “one throat to choke.”

Site License

A License that covers all personnel located at a particular site, usually for a single fee. Contrastwith Enterprise License and Per-Seat License.

Six Sigma

A process improvement methodology intended systematically to identify and reduce unexpectedvariation in processes (such as business processes) with the goal of improving quality. Invented byMotorola and adopted by General Electric, DuPont and other major corporations.

Slander

See Defamation, Libel and Slander.

Software Development Agreement

An agreement similar to an Independent Contractor Agreement, but more focused on softwaredevelopment, and with more detail concerning the software development process.

Software Development Kit (SDK) License

An agreement to permit use of a set of software tools for the development of software.

Sole Remedy

A provision in a contract that limits the Remedies that a party may pursue against the other party.For example, a services agreement may limit the buyer’s Remedies to refund or re-performance of the services, and exclude Remedies such as Damages for breach of contract. Or, Indemnificationmay be specified as the sole Remedy for Breach of third-party claims, which would exclude anyDirect Damages for Breach of contract (in other words, one party would defend a second party and




pay for the claims made by a third party against the second party, but the first party would not beliable for breach of contract to the second party).

Some Rights Reserved

A phrase used by the Open Content organization Creative Commons to indicate that some rights toa Work are available for unrestricted use, while others are reserved to the creator .

Source Code

The high-level, human readable form of computer program code. In proprietary licensing models,source code may be very valuable because it would enable other persons such as competitors toReverse-Engineer, modify and duplicate a company’s proprietary software products. In OpenSource License models, this type of Reverse-Engineering and modification is encouraged, andtherefore in those models, the emphasis is on requiring licensees to make the source codeavailable.

Source Code Escrow

An arrangement in which proprietary Source Code is deposited on a confidential basis with anindependent third party escrow agent, and released upon certain Escrow Release Trigger Events.Source code escrows are important in proprietary licensing models in which the licensor does notwish to release its Source Code to others, or has not received a sufficient payment to justify suchrelease, and instead has released only Object Code. The licensee, however, may be concerned thatit will have no ability to maintain and repair the software in the event the licensor ceases to exist,files for bankruptcy, or defaults in its Maintenance and Support obligations. A source code escrowis a common approach to reduce these risks. However, in practice, these source code escrow may

not be updated frequently enough, and the code may not have sufficient documentation to beusable after a source code escrow release. One approach for those issues is to use a “verified”source code escrow, in which the escrow agent (or a third-party consultant) examines and verifiesthe usability of the Source Code. Although this sounds good in theory, it may not be practicaldepending on the situation. Some software owners with a large customer base of licensees create a“master” source code escrow with a single escrow agent, and simply add each customer as a beneficiary of the master escrow. Source code escrows generally are unnecessary for Open SourceSoftware.

Specifications

The written requirements for software or another technology to be developed.

Statement of Work (SOW)

In a services or technology development project, a document that describes the technology to bedeveloped, Specifications and requirements for Acceptance of the technology, Deliverables,Milestones, Milestone Schedule, and Payments. Companies frequently use a single “master”agreement, and then attach multiple statements of work for specific projects. Statements of Work








are often attached to Independent Contractor Agreements and Software Development Agreements.Also known as a Schedule of Work, Task Order, or Work Order.

Statute of Limitations

A limitation on the time period that someone can bring a legal claim against someone else, for example, a time limitation on one party filing a lawsuit against the other party to the contract for breach of that contract. Some contracts include a “private“ statute of limitations that contractuallyshortens the time limit for bringing a claim or filing a lawsuit under the contract.

Strict Conformity

A standard by which work product or Deliverables are measured against Specifications or other Acceptance criteria. “Strict” means that the work product must conform or comply to a detailedlevel, possibly even without small defects. Although it is often requested, in many situations, thisstandard may not be realistic and can even be counter-productive.

Subcontracting

The hiring of a third person to do some of a party’s work under a contract. Subcontracting may beconsidered a delegation of the party’s obligations under the contract.

Sublicense, Sublicensing

The further outbound Licensing to other persons of rights received in a License. The rightssublicensed out cannot be broader than the rights received.

Substantial Conformity

A standard by which work product or Deliverables are measured against Specifications or other Acceptance criteria. “Substantial” means that the work product must conform or comply withoutany major or Material deviation, even it does have small defects.

Successor

An entity who holds or who has “succeeded to” the assets, rights, and obligations of another entity,for example, the surviving entity of a Merger of two companies.

Support Plan

A Maintenance and Support Agreement for mass market products. Generally pre-packaged andnon-negotiable.




Supremacy Clause

Article VI, paragraph 2 of the United States Constitution, which establishes the Constitution,federal statutes, and U.S. treaties as “the supreme law of the land“ in the U.S. The SupremacyClause is important to technology transactions because many important Intellectual Property rights

(such as Patents, Copyrights, and federally registered Trademarks) and other important onlineactivities (such as electronic signatures and liability for User Generated Content) are covered byfederal statutes, and certain Intellectual Property is governed in part by U.S. treaties, but contractlaw is generally covered by state law. Even though federal law and U.S. treaties are supreme over state law, working out the areas of conflict and overlap is very complicated.

Survival (of Rights or Contract)

The continuing effectiveness and enforceability of rights or obligations under a contract, even after it terminates or expires. Because surviving rights often can survive indefinitely, it is worthwhile tocheck the contract provisions that describe them.

T

Term (of Agreement)

The time period during which an agreement is in force.

Termination

The ending of a legally enforceable contract, usually due to an act of one of the parties, such as

sending a termination notice. Certain terms and conditions of a contract may remain in force after Termination if the contract contains a survival clause, see Survival (of Rights or Contract).Contrast with Expiration.

Termination for Cause

The termination of a contract due to Material Breach by a party or some other event specified as a proper cause for termination. In employment agreements, termination for cause may be set forth inmuch greater detail than other agreements, because such a termination may result in loss of bonuses and other benefits.

Termination for Convenience

The right to terminate a contract for any reason, or no reason, at any time. There is no need to prove breach by the other party. It can cover many problems in an agreement, since the party withthe right to terminate can do so at any time, and isn’t locked into a long-term relationship. Alsocalled Termination at Will. Contrast with Termination for Cause.




Term Sheet

A short summary of the high-level business points of a deal, such as subject matter and products,services and Intellectual Property rights affected; financial terms; and duration. Most term sheetsare one to five pages long. Term sheets most appropriately should not be legally binding. If a so-

called term sheet covers all of the Material terms and conditions of a deal, and is legally binding(i.,e., meets the requirements for Formation of Contract), then it is more properly a contract, notmerely a term sheet. With the proper language, it is possible to sign a term sheet without making itlegally binding. Also called a Letter of Intent (LOI), Deal Memo, Memorandum of Understanding(MOU), and Heads of Agreement.

Terms of Service (TOS) or Terms of Use

The contractual terms and conditions a governing access to and use of web sites or web services.For a web site, these are often provided as a Browsewrap. They often include an Acceptable UsePolicy (AUP) whether or not the policy is identified by that name.

Territory

The geographic area in which contract rights or Intellectual Property rights may be exercised.

Third Party Beneficiary

A person or entity who has an enforceable interest in a contract between two other parties. In thewords of California Civil Code Section 1559, “a contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.” Third party beneficiaries generally have the right to consent to any changes that affect their interest in the

contract. Contracts may specify that no third party beneficiaries exist under them.

Time and Materials Pricing

Pricing for services that is based on an hourly rate plus reimbursement for expenses such as the purchase of equipment and supplies.

Time of the Essence Clause

A contract provision that invokes a strict legal interpretation of all time deadlines in a contract.Although this provision may seem like boilerplate, it can have important implications if the parties

later disagree on timing of activities or events in connection with a lawsuit or arbitration.

Trade Secrets and Proprietary Information

Trade secrets are information (and the ideas contained in it) that has economic value and that iskept secret, and are protected as such under state law. Proprietary Information includes tradesecrets, but may include other confidential information that does not rise to the level of protectionof trade secrets.


http://caselaw.lp.findlaw.com/cacodes/civ/1556-1559.html





Trademarks, Service Marks, and Trade Dress

Trademarks are words or symbols (such as a graphic image of a logo) to identify the source of goods, and distinguish the goods or services from those offered by another person. Service Marksare trademarks, but apply to services and not products. Trade Dress is product design or

configuration that is distinctive enough to act as a trademark.

Trademark Notice

A legal notice indicating the name of a Trademark or a Service Mark, the ownership status(whether registered in the U.S. Patent & Trademark Office or not), and the name of the owner. For Trademarks and Service Marks that are registered in the U.S. Patent & Trademark Office, theencircled-R symbol can be used beside the mark and the owner’s name. Until a Trademark or Service Mark is so registered, only the TM symbol can be used in the notice. Proper use of atrademark notice for a registered Trademark or Service Mark can enable the owner to receiveenhanced damages and other remedies against Infringement of the Trademark or Service Mark.

U

Uniform Commercial Code (UCC)

The law that governs sales of tangible personal property as well as a variety of financialinstruments and financing transactions. Attorneys look to it by analogy when dealing withtechnology transactions concerning intangible property such as Intellectual Property rights. (Therehave been attempts to create a similar law that applies explicitly to intangible property, but none of them has been widely accepted.) The UCC is called a “uniform” law because a template was

proposed for adoption by each U.S. state, and the states adopted the template with their ownunique state-specific variations. In California, the UCC is called the California Commercial Code.

Uniform Computer Information Transactions Act (UCITA)

A uniform law proposed to cover commercial software licenses, since Article 2 of the UniformCommercial Code generally applies to tangible goods, and not intangible goods such as software.However, UCITA was controversial and not broadly adopted. As of May 2009, only Virginia andMaryland have adopted it.

Uniform Electronic Transactions Act (UETA)

A uniform electronic signature law adopted by various U.S. states, including California. Under theSupremacy Clause, the state laws adopted based on UETA are partly preempted by federalelectronic signature law, such as E-SIGN.


http://www.uniformlaws.org/Legislation.aspx


http://uniformlaws.org/LegislativeFactSheet.aspx?title=Electronic%20Transactions%20Act







United Nations Convention on Contracts for the International Sale of Goods (CISG)

A treaty that creates a unified international law for the sales of goods, regardless of Choice of Lawof a particular Jurisdiction. It entered into force as a treaty, and therefore federal law, subject to theSupremacy Clause, on January 1, 1988. CISG is similar to the Uniform Commercial Code enacted

by various states of the United States. Article 6 of CISG provides that “The parties may excludethe application of this Convention or, subject to article 12, derogate from or vary the effect of anyof its provisions.” The application of CISG is almost always excluded in international technologyagreements with U.S. parties.

United States Copyright Act

This statute governing Copyright law in the United States is codified at Title 17 of the UnitedStates Code.

Universal Copyright Convention (UCC)

An international treaty that governs copyright rights. It has largely been superseded by the BerneConvention, once the U.S. joined the Berne Convention and enacted the Berne ConventionImplementation Act. Although the acronym for the Universal Copyright Convention is “UCC,” inthe U.S. this acronym more commonly refers to the Uniform Commercial Code.

Update

Minor changes to software after it has been delivered, such as a minor error correction, bug fix, or patch or minor enhancement to functionality or performance. It also may be defined as changes tocode versions to the right of the decimal point (e.g., from version 1.1 to 1.2). Updates are provided

under Maintenance and Support Agreements, or may be freely available. Contrast with Upgrade.

Upgrade

Major changes to software after it has been delivered, such as major new features or major enhancements to functionality or performance. Upgrades are sometimes defined as changes that aresold separately. They also may be defined as changes to code versions to the left of the decimal point (e.g., from version 1.0 to 2.0). Upgrades are sometimes provided under Maintenance andSupport Agreements, or may be purchased separately. Contrast with Update.

Uptime Percentage

The percentage of time during which an online system is available for productive use bycustomers. Often, Scheduled Maintenance will not be included when calculating an UptimePercentage.


http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG.html





http://cisgw3.law.pace.edu/cisg/text/treaty.html



http://www.copyright.gov/title17/










Uptime Guarantee

A contractual assurance that an online service provider will maintain a certain Uptime Percentage,often with service credits as the Remedy for any Breach of the guarantee.

User-Generated Content (UGC)

Content created and uploaded by and-user customers, such as forum postings, blog comments,user-written product reviews, and uploaded amateur and home videos. See also CommunicationsDecency Act and DMCA (Online Service Provider Immunity).

Utility Patent

See Patent.

V Vendor Lock-in

Creation by a vendor of barriers and switching costs to prevent its customers from moving to adifferent vendor. For example, a vendor may adopt proprietary standards, interfaces and API’sin its products that make it difficult for customers to move to another vendor. Open SourceSoftware and customer demands for Interoperability can counteract vendor lock-in.

W-X-Y-Z

Warranties (in general)

See Representations and Warranties.

Warranties, Express

Warranties that a seller makes explicitly to a buyer. See California Commercial Code Section2314. Sellers must use care to avoid inadvertently creating express warranties in sales copy.Contrast with Implied Warranties, which can apply regardless of what the seller communicates tothe buyer, unless the seller expressly disclaims them with a Disclaimer of Warranties.

Warranties, Implied

Warranties that are read into a contract by law, even if they do not appear in the contract. Toexclude an implied warranty, the contract must include a Disclaimer of Warranties. ImpliedWarranties under the Uniform Commercial Code include the implied Warranties of Merchantibility(California Commercial Code Section 2314) and Fitness for a Particular Purpose (California












Commercial Code Section 2315). See also Disclaimer of Warranties. Contrast with Warranties,Express.

Withholding Taxes

Royalties paid on sales made outside of the U.S. may be subject to withholding taxes (by thecountries where the sales were made) when the Royalties are brought into the U.S. Many countrieshave tax treaties with the U.S. that reduce or eliminate withholding taxes. In many cases, the party paying the Royalty will “gross up” the payment so that the withholding tax does not reduce the netamount to be received by the licensor.

Work

Original expression that is protected by Copyright law. This law recognizes several types of Works, such as anonymous works, collective works and compilations, Derivative Works, jointworks, pseudonymous works, works of the United States Government, and Works Made for Hire.

In addition, Works of authorship are defined to include categories such as literary works; pictorial,graphic, and sculptural works; motion pictures and other audiovisual works; and sound recordings.See 17 United States Code Section 101.

Work Made for Hire

A specific type of Work under the U.S. Copyright Act, in which the party who hires a freelancer or consultant owns the work product and even is considered the author, if the requirements of thestatute (which include a written contract) are met. For more specifics and limitations, see thedefinition in 17 United States Code Section 101.














About the Author

Harry Boadwee is a corporate and technology lawyer with more than 20 years of experience. Herepresents U.S. and international businesses in negotiation of strategic alliances, technology and

content transactions and licensing. He also advises on internet and e-commerce law and offeringsof new technology products and services. He is admitted to practice law in California and NewYork. Web site: www.BoadweeLaw.com

Prior to opening his own firm, Mr. Boadwee was Director and Assistant General Counsel of IntuitInc., an S&P 500 company known for its Quicken®, QuickBooks®, and TurboTax® software. Healso was associated with Fenwick & West LLP, a leading Silicon Valley technology law firm, andDebevoise & Plimpton LLP, a prominent international law firm based in New York City.

He is a graduate of Columbia Law School and Stanford University, and also attended theMassachusetts Institute of Technology (MIT).

He lives in Silicon Valley with his wife and family.

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