Technology Attorneys

Ways to Join Forces with another Company

For so many tech start-ups and new businesses, one way to boost performance, increase profit and stay competitive is teaming up with seasoned professional and companies that are skilled in the game. Through these firms, the new start-ups can have an amazing opportunity to participate in government contracts as subcontractors and also get the exposure and experience to scale through the competitive business landscape while receiving detailed guidance from experienced contractors. 

In teaming up with other businesses, there are some level of partnership and agreement that must be entered into by both firms. Some of these terms include the following:

Strategic alliance: Strategic alliance is a relationship between two or more businesses in orders to pursue a set of agreed goals and meet a critical need while remaining independent. This allows companies, especially start-ups, to expand their documented capabilities and pursue projects beyond their normal capabilities.

Teaming agreement: This, on the other hand, involves two firms, partnering on a single proposal. It can also be described as a prime/subprime contract between two parties where one of the teams pursue a contract as the prime vendor.  The terms between the prime and subprime vendors are outlined in the Teaming Agreement.  One of the benefits of this type of contract is that it allows parties to pool resources from a limited purpose without acquiring a joint venture entity. 

Collaboration contract:  This is also known as a collaboration agreement; it involves two people or companies collaborating to pursue a defined goal. It is a specie of unincorporated joint venture because the collaborators must also contribute resources and decide who owns the proceeds. 

Joint venture: This involves two different companies, individuals or businesses coming together to partner as joint parties. These companies agree to combine their skill, knowledge, efforts, and resources but not permanently.  Each party maintains their own identity.

Things to consider when choosing a partner

As a start-up, there are so many factors to consider before entering into an agreement or any form of contract with tech companies and professionals; some of these factors include:

  • Positive client standing
  • Clarity of commitment and communication
  • Business ethics and trust
  • Capabilities to deliver on time.
  • Does your contract allow for Subcontracting?  Check the fine print.

Finally, every tech start-up entering into an agreement with professionals must understand all terms in an agreement before teaming up with one. 

Talk to Us Today

About Framing Out Your Joint Business Rleationship

Force Majeure Clauses

Bet you never read one until now…

               Force majeure clause.  It’s one of those boilerplate paragraphs that no one reads until, you know… now.  It’s one of the first things I was asked, as an attorney, about the pandemic and contractual obligations on a contract.

               A force majeure clause (“force majeure” is French for “superior force”) it is a contractual provision that excuses performance in the event of extraordinary, unforeseeable, and unavoidable circumstances which prevents one or both parties from meeting obligations defined in a contract. It serves to excuse parties from contractual duties due to forces beyond their control.   Generally, it accounts for natural disasters, social unrest, etc. 

               At the moment, there are arguments on the classification of COVID-19 as a force majeure event; however, this is difficult to define. What is important to note is that this novel virus has changed workplace dynamics globally. Travel bans, curfews, and quarantines have forced millions of employees all over the world to work remotely.

Force Majeure and COVID-19

               In the wake of COVID-19 many companies’ struggle to fulfill their contractual obligations because of supply chain management issues, lockdowns, the need to downsize workforces, and the embargo on travel or the movement of goods across the interstate or international borders. In extreme and unexpected circumstances like these, contractual force majeure clauses might be used to justify voiding contractual obligations, especially when such scenarios are overlooked in the drafting and negotiation process.

               Amidst the coronavirus pandemic, many employers are now faced with major disruptions to their business operations. Boardrooms are now forced to make difficult decisions that affect their employees: hiring, layoffs, furloughs, and compensation.

               Employers who do not have remote work models are currently being forced to create them. These flexible working policies, which include the use of technology, enable their employees to work from home efficiently. Health concerns in the face of the pandemic make this imperative.

               Several of the tough decisions taken by business management will implicate written employment contracts and collective bargaining agreements that contain “force majeure” clauses.

Force Majeure and Remote Work

               Lots of employee contracts do not make provisions for remote work. Yet this is a compulsory outcome in the wake of the coronavirus. What’s more interesting is the definition of what a force majeure event is at the moment.

               A lot of force majeure clauses are not expressly clear on terms like “pandemics,” “epidemics,” or “quarantines” as events that might trigger said clause. Yet in some quarters, a natural disaster may qualify as an “act of God” that is beyond the control of the party in question. The question then remains if COVID-19 can be defined as an “act of God.”  Interpreting the terms of the force majeure clause in this context is tricky and will have a lot of grey areas. For instance, justifying loss or using reasonable efforts to continue to execute the terms of a contract may include allowing employees to work from home or the facility to provide services remotely. In the event that the contract can be performed remotely, this option may prevent the force majeure clause from being activated

Conclusion

               A little foresight can help you through some tough scenarios.  Boilerplate clauses are not there for the sake of beefing up a contract.  While many do have standard language, they are just as important, if not more than any other term of a contract.  Make sure you review them properly. 

Contracts and the Art of Tea Leaves

Take a seat, show me your contract and I’ll tell you about yourself.  I may even be able to tell you your future.  Legal psychic?  Maybe or maybe I have read enough contracts in my career that there are indicators, tells, and if I couldn’t, then I wouldn’t be a great advisor.

 

I really do enjoy reading and drafting contracts.  To me, a contract is a story unfolding and every contract has a spirit.  Most recently, I created an agreement for a client and as I was drafting the contract, I was visited by the ghost of contracts past.  All the good and bad that have happened with every contract before this one shaped this contract.  (I’m looking at you evergreen clause that traps businesses in services they don’t want…)

 

At this point, I’ve lost some with this narrative, but those of you that stayed can appreciate that I have a personality just like my clients do.  It is my job, to reflect that personality and the culture of the company in every contract I touch.

 

Here are a few things I’ll look at when drafting a contract:

  1. First, is it the right contract? I know this goes without saying but some lawyers either don’t understand the deal or try to make a square fit in a round peg.  For instance, you don’t want a license agreement when you are really entering into a reseller agreement.  Also, sometimes you may have two different transactions with the same parties.  IT’S OK to have two separate contracts.  Why bind yourself to both when maybe only one transaction will actually be successful?
  2. How one sided is the contract? Is it all about the take and no give?  Fun fact, bigger companies tend to have more fair contracts than smaller companies.  I can read a long contract and have two comments and then read a 10 page contract that I completely mock up.  Why?  Big companies understand that it takes a lot of time to negotiate every point.  They want a mutually beneficial relationship and don’t look to make money on damages.
  3. Which brings us to the next point, liquidated damages. BE CAREFUL here.  They are often inflated and have no direct corollary to actual damages, and more than likely will not hold up in court.
  4. Boilerplate paragraphs aka ‘standard paragraphs’ which may, in title, be standard in contracts but their terms are anything but. Jurisdiction, venue, attorney’s fees, even assignment clauses.  A business dispute will absolutely turn on these so called standard paragraphs and I have gotten to many settlements because the standard paragraph overcomplicated the dispute.  (I will delve into more of these in later posts because jurisdiction is a fun one.)
  5. And of course, the substance of the deal to make sure it is reflected correctly and the right warranties, limitation of liabilities, IP rights, etc are memorialized. Also, that the contract has the right cash flow for the business holder because that is imperative for operations.

 

Every contract embodies the spirit of who you are as a company.  It is about leverage and negotiating power.  If you make your contract fair and concentrate on the art of the deal, you set the stage for a healthy business relationship; hopefully a long term one.

 

Don’t download your next contract from the internet, contact us today for contracts that showcase you and get you paid.

What’s in a Name? EVERYTHING!

Congratulations on your decision to start a new business (and your subconscious decision to forego sleep…)!  Deciding on a business name might very well be the most important decision you make; it can make the difference between a strong branding campaign or perhaps (gasp!) having to change your name.

You name/brand will, of course, be your product or service name, but also your domain name and often your corporate name (you are incorporating, right?).

So, before you choose your name, consider the following:

  • Choose a Unique Name
  • Make the Name Brief
  • Make the name memorable and easy to spell

1) Choose a Unique Name. When you select a business name you are really branding your business.  Branding isn’t just for the big boys, it is crucial to any business as it can give you a competitive edge in the marketplace.  After all, you need to make it easy to find you.  A brand is “A name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers.”  In other works, a trademark.

2) Make the name brief (three to six words).  Long names are hard for customers to remember.  You want customers to remember the name AND be able to tell other people what it is. It is also important that the name be short for promotional purposes e.g. domain names, business cards, displays or advertising ads. Which can ultimately save you on cost for advertising, printing, etc.

Try to make the name descriptive of your product or services, but not too descriptive.  If the name is descriptive it can actually draw business to itself.  It makes it easier for potential customers to identify the type of business and locate you, especially if you are just starting out.  On the other hand, if it is too descriptive, you run the risk that the trademark office might reject your trademark application.

4) Make the name memorable and easy to spell.  Potential customers need to be able to remember your business name. They also need to be able to find it easily if they’re looking for it online or in a phone directory.

There are legal implications to consider when selecting a name for your business.  You must make sure to avoid misleading names.  Avoid names that are similar to other companies as to avoid any trademark implications.  Also, do not imply professional credentials that do not exist for example if you are in the health care field but are not a medical doctor do not include MD in the name meaning to imply such.

Once you have a name in mind it is best to research the potential name to make sure it is not already in use.  There are several was to research potential business names.  Some suggestions are:

  1. Popular Search Engines
  2. Patent and Trademark Office
  3. Local business directories in your market (public library or business license offices).
  4. Department of State

 

IMPORTANT:  Just because the domain name is available and/or the name is available with your department of state does NOT mean there isn’t a concern for trademark infringement.  We will talk more about this later, but it is important to research the name or consult a trademark attorney before settling on a name.

Contact Us Today Regarding Your Intellectual Property