Patent Infringement Warranties in BPO
October 9, 2009 by Bierce & Kenerson, P.C. ·
Today, virtually any contract, including a business process outsourcing contract, for the delivery of goods, services or licensed rights in applied technology contains an indemnification clause concerning possible infringement of third-party intellectual property rights. In the initial draft of the agreement, the typical clause provides for unlimited indemnification for patents, copyrights, trademarks and trade secrets. […]
Liability of Service Provider for Customer’s Copyright Infringement
October 9, 2009 by Bierce & Kenerson, P.C. ·
Litigation involving providers of software or services for the peer-to-peer file sharing on the Internet highlights the risk for service providers under the theories of contributory infringement and vicarious infringement of copyright. Napster, Aimster and Grokster file sharing systems and Gnutella software provide some analogies for Internet hosting services. A review of these decisions suggests that […]
Insider Theft of Trade Secrets in India: Employee of Captive R&D Subsidiary Accused of Source Code Theft (and What You Need to Know About Protecting Your Trade Secrets Abroad)
October 9, 2009 by Bierce & Kenerson, P.C. ·
In a global economy, which risks are greater: theft of trade secrets by a service provider or theft of trade secrets by an employee of a foreign subsidiary? How can a global enterprise contain such risks in either case? The story of theft of source code by an employee of an Indian research and development […]
Privacy in Outsourcing of Health Information
October 9, 2009 by Bierce & Kenerson, P.C. ·
The general Privacy Rule under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) requires anyone to obtain a patient’s prior consent in order to use “individually identifiable health information” for non-medical purposes, such as employer evaluations. For medical treatment and payment purposes, however, using or sharing medical information “for incidental use or disclosure” […]
Human Resources Outsourcing: Employment Manuals as Basis for Exceptions to the Employer’s Liability for Wrongful Termination of Employment and Defamation
October 9, 2009 by Bierce & Kenerson, P.C. ·
Summary. Human resources outsourcing involves facilitation of the employer/customer and management of its human resources. This includes assistance by the HR service provider in avoiding or limiting the risks of litigation by employees who are terminated for matters arising out of breach of contract and other policy issues that could embroil the employer in statutory […]
Trade Secrets in Outsourcing
October 9, 2009 by Bierce & Kenerson, P.C. ·
Summary. The ability to develop and protect trade secrets is an essential requirement for the development and maintenance of an enterprise’s competitive advantage. This commentary discusses some of the business, contractual and criminal issues involved in trade secrets in outsourcing. At a minimum, both users and providers of outsourced services should understand the nature and […]
Limits on Exclusive Use of “Trade Secrets” in Deal Structuring: Investment Banker Cannot Claim Misappropriation of Trade Secret for Bowie Bonds
October 9, 2009 by Bierce & Kenerson, P.C. ·
What right does an external advisor have to own the exclusive right to structure a business transaction? This question may become more interesting to consultants and outsourcing service providers who might wish to rely upon trade secrecy to develop a “new market” in a “new type of service” or “best practices.” The bottom line appears […]
Business Intelligence and Industrial Espionage in Outsourcing
October 9, 2009 by Bierce & Kenerson, P.C. ·
Boeing Loses $1 Billion in Transactions as Punishment, Escapes Debarment Summary. “Business intelligence” refers to the practice of collecting and analyzing competitive information in the marketplace to assist an enterprise in self analysis and redirection of its resources to maintain and improve competitiveness. “Industrial espionage” refers to the clandestine methods of obtaining competitive information that […]
Sarbanes-Oxley Act of 2002: Retention of Records by Auditors and their Clients relating to Outsourcing
October 9, 2009 by Bierce & Kenerson, P.C. ·
Summary: The Sarbanes-Oxley Act of 2002 was intended to prevent future destruction of documents relevant to audits of companies that report their financial information to the U.S. Securities and Exchange Commission. On January 24, 2003, the SEC issued a final rule defining the rules that auditors and issuers and registered investment companies must follow to […]
To Bundle or Not to Bundle Goods and Services: NASA’s Desktop Contract
October 9, 2009 by Bierce & Kenerson, P.C. ·
Some bundling of goods and services is intrinsic to all outsourcing. The advantages of bundling to the service provider have been touted by Lou Gerstner, who, while Chairman of IBM, observed that services are the “wrapper” in delivering goods and related services as a package This case study comments upon the practice of bundling. NASA’s […]
Outsourcing: Evolution From Single Supplier to Best of Breed
October 9, 2009 by Bierce & Kenerson, P.C. ·
In a globalizing, services-based economy, outsourcing has rapidly grown in the last decade. Once confined to “low-value,” low-technology services such as a company’s in-house photocopy machines, messengers, food services and janitorial operations, outsourcing has moved “up the value chain.” At the same time, changes in the nature of outsourcing have led to a variety of […]
Replacing a Service Provider in Midstream: Case Study on Equifax Spin-off, Certegy’s Cancellation of EDS Contract and Hiring of IBM
October 9, 2009 by Bierce & Kenerson, P.C. ·
Summary: The termination of a long-term outsourcing contract in midstream, before the normal expiration, requires careful legal and business planning. It may also require payment of a large termination fee. In this case study, we analyze such a case involving the termination of an existing EDS contract and the transitioning to IBM as a new […]
Document Mismanagement: When the Customer Miscommunicates a Court Order to the Document Managing Outsourcer
October 9, 2009 by Bierce & Kenerson, P.C. ·
Summary. For corporations that have outsourced any process of document storage or management, electronic discovery procedures in litigation can be a nightmare. The lessons of multiple mistakes by both the enterprise customer and the service provider leads us to suggest some “best practices” in relation to litigation management and document management for inclusion in the […]
Document Retention, Document Management and Data Warehousing in Outsourcing
October 9, 2009 by Bierce & Kenerson, P.C. ·
Business enterprises must comply with a multitude of laws and rules governing the retention of business records. Destruction or loss of business records could cause serious loss to the enterprise and its trading partners. Fines might be levied under regulatory audits. Documents supporting novelty, originality or date of reduction to practice might result in a […]
Outsourcing as a Tool in Exiting a Failing Business: National Australia Bank’s Acquisition of Shares in Rival AMP Ltd.
October 9, 2009 by Bierce & Kenerson, P.C. ·
Outsourcing can provide a unique benefit in preserving the value of a declining line of business. Consider an industry where many major players are suffering operating losses, where “ill-timed” acquisitions have resulted in write-offs and loss of shareholder value, and where there are no buyers or where the assets impaired by recent losses cannot be […]
Legal Compliance in Outsourcing
October 9, 2009 by Bierce & Kenerson, P.C. ·
When is the Service Provider Liable for its Customer’s Compliance with Laws, including Payment of Fines and Penalties for Non-Compliance? When is the service provider liable for its customer’s compliance with laws, including payment of fines and penalties for non-compliance? Most outsourcing agreements require each party to comply with applicable laws. However, as business process […]
Vetoing the Legislation Against Outsourcing in California
October 9, 2009 by Bierce & Kenerson, P.C. ·
Politics and Outsourcing Quite evident in the recent presidential campaign, as well as in numerous legislative campaigns across the country, was the issue of outsourcing and whether curbs should be placed on this business practice in both the public and private arenas. In the months leading up to the elections, the media filled hours of […]
Death of Captive Paradigm? Business Transformation of a Shared Services Captive: Legal and Business Issues in Conversion from SSO to Independent BPO Service Provider
October 9, 2009 by Bierce & Kenerson, P.C. ·
General Electric Company’s announcement on November 8, 2004, that it has agreed to sell 60% of its Indian captive services company GE Capital Information Services (“GECIS”) marks a turning point in the trend towards establishment of offshore captive services companies. This article considers the legal and business issues in a conversion of a foreign captive […]
Litigation: “Spoliation of Evidence” Where Records Are in the Hands of Service Provider
October 9, 2009 by Bierce & Kenerson, P.C. ·
Principle decision: A customer’s failure to identify the existence of, or provide, business records held by a service provider constitutes spoliation of evidence and justifies a directed verdict in favor of claimant suing the Customer. Customers, especially government bodies, can be classic deep-pocket defendants in personal injury tort litigation. If the customer fails to produce […]
Forensic Investigations: Distinguishing Ordinary Outsourced Investigation from Privileged Investigation
October 9, 2009 by Bierce & Kenerson, P.C. ·
Many providers of finance and accounting (“F&A”) services cover a broad array of managed services. The functions of internal audit, pre-litigation claims and, more specifically, insurance claims processing deserve special attention from a legal standpoint. This article addresses distinctions between ordinary managed services (subject to pre-trial discovery) and “privileged” investigations that are not disclosable to […]