Negotiating Platform and Technology-Enabled Agreements

Masters of Advertising Law Conference attendees: Scroll down for CLE materials

A panel of industry lawyers shared questions that companies should consider as they evaluate contracts with marketing technology vendors. The panel organized these questions by the topic within contracts that they pertain to, but first began with some questions for a company to consider as it undertakes its upfront due diligence in exploring the use of a technological tool.

Key Takeaways

Upfront Due Diligence

  • What does the tool do?
  • How will it be implemented?
  • Who will use it?
  • How critical is the tool to the business team?
  • What business processes could be affected?
  • What could be the tool's impact on third parties?

Technology

  • Is the tool's use case for the business compatible with the license rights? For instance, do the license rights include interface with the third-party products needed for the business' use case?
  • Does the warranty guarantee the needed rights throughout the term of use? (Don't rely on product documentation to enshrine these rights, as that documentation is subject to change.)
  • Does the warranty cover industry-standard anti-virus protection and processes?
  • Does the agreement pledge to maintain compatibility with products you need the tool to interface with?

Privacy

  • What personal or other confidential information will be touched by the tool?
  • What are the applicable jurisdictions and laws?
  • Does the contract include language that restricts the vendor's use of data to maintain legality?
  • Does the vendor gather data from the use of the tool and then resell that data as a separate product to other buyers? Are you comfortable with this arrangement?

Implementation

  • If the buyer of the tool expects the vendor to take accountability for the success of the project it will be used in, is that expectation spelled out explicitly, e.g., in the MSA?
  • If the tool needs to be integrated with your system and you need the vendor to execute that integration, is that stipulated in the agreement?
  • If you need the vendor to obtain and implement third-party components, is that stipulated in the agreement?

Intellectual Property

  • If you expect to own IP created through implementation of the tool (e.g., custom code), is that spelled out in the agreement?
  • Does the agreement include infringement indemnity?

Support Services

  • Does the agreement provide for support?
  • Does the agreement commit the vendor to having the tool functional for a certain period (e.g., 99 percent of the time)? Does it spell out what the buyer gets if that threshold isn't met?
  • Is an industry-standard disaster-recovery clause in place?
  • Does the contract place limits on the vendors' appeals to force majeure?

Termination

  • Is termination for convenience needed? Does the contract provide for it?
  • Does the contract provide for the return of data in an industry-standard format when the relationship between the vendor and the buyer ends?

Action Steps

  • The servers that will host the technology that the buyer is contracting for likely won't be owned by the vendor, but rather by a company like AWS, so ensure that the hosting provider is a subcontractor and that obligations flow to it.
  • Negotiate for the receipt of SLA credits in the event that the tool proves non-functional for a duration spelled out in the contract. Don't be content with termination rights in such an instance.
  • Secure standard vendor privacy and security documents.
  • If you need audit rights for the purposes of your own due diligence, be prepared to negotiate for them.
  • Carefully consider how much liability you let the vendor shield itself from in the event of a data breach.

CLE Materials

Source

"Negotiating Platform and Technology-Enabled Agreements." Elizabeth Allen, partner at Loeb & Loeb LLP; Maxwell Harwitt, associate at Loeb & Loeb LLP; Jan Siok, managing counsel at Toyota Motor North America, Inc. ANA 2022 Masters of Law Conference, 11/8/22.

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