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Representing High-Tech Companies

by Gary M. Lawrence, Carl Baranowski

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Counseling clients in transactions involving high-tech companies requires familiarity with several of the most complex areas of law, finance and technology. Representing High-Tech Companies book and CD is a one-of-a-kind book, designed to help you handle the whole range of legal issues in this dynamic field. Whether you are building a technology practice from the ground up or want to represent your existing clients more effectively, this book will bring you up to speed and help you stay ahead of the pack.

You'll find out about: financing and documenting joint ventures and early-stage strategic partnerships; devising workable nondisclosure agreements; managing an intellectual property portfolio; minimizing litigation risk for public technology companies; designing employment contracts and benefit plans in a highly competitive industry; handling securities laws, import/export controls, and other aspects of the regulatory scheme; and many other “hot button” legal issues facing technology-driven businesses. Featuring more than 75 forms and checklists, and a remarkable high-tech glossary of industry terms, phrases, and acronyms, Representing High-Tech Companies will quickly become your favorite legal reference. The book comes with a CD-ROM containing all of the forms included in the text.

Book #00648; looseleaf, one volume, 1,330 pages and one CD-ROM; published in 1999, updated as needed; no additional charge for updates during your subscription. Looseleaf print subscribers receive supplements. The online edition is updated automatically. ISBN: 978-1-58852-085-2

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  • Availability: Available
  • Brand: Law Journal Press
  • Product Type: Books
  • Edition: 0
  • Page Count: 1330
  • ISBN: 978-1-58852-085-2
  • Pub#/SKU#: 648
  • Volume(s): 1
  • CDs: 1

Author Image
  • Gary M. Lawrence
Gary M. Lawrence, J.D. is one of the country’s leading due diligence, investment and transactional scholars. He is a member of the adjunct faculty of the Dedman School of Law at Southern Methodist University where he teaches Due Diligence Studies to JD, MBA and LLM candidates. He is also executive director of the Center for Advanced Due Diligence Studies (www.CADDS-EDU.org), and has served as an expert witness in some of the country’s most significant investment, due diligence and fraud related lawsuits.  Previously, Professor Lawrence was a senior partner with a major international law firm where he chaired the global technology, media and telecommunications transactions practice and was a member of the firm’s global management committee.

Also by Gary M. Lawrence:
Due Diligence in Business Transactions


Author Image
  • Carl Baranowski
Carl Baranowski is a private practice attorney specializing in technology businesses and is founder and President of Corpmaster LLC, a development-stage provider of Web-based knowledge management sources to corporate and private counsel. He was formerly Director of Worldwide Best Practices in the Washington, D.C. office of Akin Gump Strauss Hauer & Feld LLP. He has served as counsel at Jabil Circuit, Inc., Dorsey & Whitney LLP, Honeywell Inc. and Gateway, Inc. and was also a software business development manager at Texas Instruments Incorporated. Mr. Baranowski has extensive experience representing high-technology companies and start-up ventures. In 1979, he received two Bachelor of Science degrees and a Master of Science degree from the Massachusetts Institute of Technology. Mr. Baranowski received his J.D. from Stanford University in 1983, where he also earned an M.B.A. He is a member of the Texas Bar.

CHAPTER 1
Introduction and Overview

§ 1.01 The Broad Range of Technology Companies
§ 1.02 The Scope of Legal, Business and Financial Issues
§ 1.03 Terminology and Terms of Art
§ 1.04 Industry Volatility
§ 1.05 The Internet

CHAPTER 2
Entity Selection and Financing Issues for Early-Stage Ventures

§ 2.01 Overview
§ 2.02 Selecting the Right Legal Entity
[1] Overview
[2] Structural Alternatives
[3] Considerations Regarding Tax Treatment and Liability Selection Process
[4] Putting It All Together
§ 2.03 Financing Alternatives
[1] Stages of Financing
[2] Obtaining Funds; Selected Sources
[3] The Importance of an Introduction
§ 2.04 Executive Summaries and Business Plan
[1] How to Prepare an Effective Executive Summary
[2] How to Prepare an Effective Business Plan
§ 2.05 Valuation Issues
§ 2.06 Financing Term Sheets
[1] Overview
[2] Negotiation
[3] Term Sheet Components
§ 2.07 Venture Capital Term Sheets
[1] Overview
[2] Checklist
§ 2.08 Importance of the Management Team
§ 2.09 Negotiating Definitive Agreements
[1] Selected Purchase Agreement Considerations
[2] Selected Stockholder Agreement Considerations
[3] Restated Certificate of Incorporation
§ 2.10 Form: Short-Form Subscription Agreement (Issuer Favorable)
§ 2.11 Form: Subscription Agreement for Corporations Convertible Preferred Stock with Alternative Pro-Issuer Provisions Included (Investor Favorable)
§ 2.12 Form: Investor Rights Agreement (Pro-Investor)
§ 2.13 Form: Right of First Refusal and Co-Sale Agreement Agreement (Pro-Issuer)
§ 2.14 Form: Restated Certificate of Incorporation-Delaware (Pro-Investor)
§ 2.15 Form: Technology Company Pre-Investment Checklist
§ 2.16 Form: Outline for Technology Company Financing Proposal
§ 2.17 Form: Financing Presentation Checklist
§ 2.18 Form: Financing Term Sheet: Convertible Preferred Equity

CHAPTER 3
Confidentiality and Nondisclosure Agreements

§ 3.01 Overview of Nondisclosure Agreements
§ 3.02 Protecting Confidential Information
[1] Trade Secrets
[2] Economic Espionage Act
[3] Uniform Trade Secrets Act
§ 3.03 Enforceability of Nondisclosure Agreements
[1] Overview
[2] Protectable Confidential Information
[3] Geographic and Temporal Scope
[4] Preemption Concerns
[5] Discovery Risks
[6] Antitrust Risks
[7] Limitations on the Use of Nondisclosure Agreements Imposed by the Telecommunications Act of 1996
§ 3.04 Drafting Considerations
[1] Scope
[2] Receipt and Use of Confidential Information; Standard of Care
[3] Duration
[4] Mandatory Disclosure
[5] Return or Destruction of Confidential Information
[6] No License
[7] No Restriction on Normal Business Activities
[8] Assignment
[9] Severability
[10] Injunctive Relief
[11] No Press Releases or Other Public Statements
[12] Choice of Law
[13] Additional Measures That Might Be Applicable in Certain Contexts
§ 3.05 Form:Company Favorable Nondisclosure Agreement
§ 3.06 Form: Joint Nondisclosure Agreement
§ 3.07 Form: Pro-Company Nondisclosure Letter Agreement with Third Party Consultants
§ 3.08 Form: Memorandum Regarding Antitrust Violations

CHAPTER 4
Transaction Planning, Due Diligence, Term Sheets and Letters of Intent

§ 4.01 Overview
§ 4.02 Setting the Stage
§ 4.03 Overview of Term Sheets
[1] Definition
[2] Purpose
[3] When to Use a Term Sheet
§ 4.04 Overview of Letters of Intent
[1] Definition and Purpose
[2] When to Use a Letter of Intent
[3] Other Advantages of Letters of Intent
[4] Disadvantages of Letters of Intent
[5] Binding, Nonbinding and “Binding in Part” Letters of Intent
§ 4.05 Legal Implications of Letters of Intent
[1] Overview
[2] The Risk of Unintended Consequences of Letters of Intent
§ 4.06 Checklist: Letters of Intent
§ 4.07 Checklist: Term Sheets
§ 4.08 Form: Letter of Intent for Technology Joint Venture
§ 4.09 Form: Term Sheet for Technology Joint Venture
§ 4.10 Form: Short Form Letter of Intent-Stock Purchase
§ 4.11 Form: Equity Investment Due Diligence Request Form
§ 4.12 Form: Software Company Due Diligence Request Form

CHAPTER 5
Consortia, Joint Ventures and Strategic Partnering

§ 5.01 Overview
§ 5.02 Custom Development and Manufacturing
[1] Technology
[2] Engineering Changes; Cost Structure
[3] Right of First Refusal
[4] Minimum Commitments
[5] Ordering Procedures
[6] Exchange Rates
[7] Promotion; Training
[8] Defects; Servicing
[9] Warranty
[10] Government Contracts
§ 5.03 Combined Software and Services
[1] Background
[2] Order, Customer Information
[3] Compiler Technology
[4] Services
[5] Defining “Use” of Software
[6] License Restrictions
[7] Confidentiality
[8] Alternative Provisions
§ 5.04 Co-Marketing
§ 5.05 Pre-Development Marketing
[1] Finder’s Fee
[2] Development Incentives
[3] Recoupment
[4] Pricing Integrity
[5] Distribution Restrictions
[6] Exclusivity
[7] Support Obligations
[8] The Software License Agreement
§ 5.06 Co-Development
[1] Defining the Technology
[2] Project Management
[3] Antitrust Concerns
[4] Conflicting Arrangements
§ 5.06A Exporting Technology: International Distributorships and Technology Licensing
[1]  Types of Export Transactions
[2] Selecting Foreign Distributors and Licensees
[3] Legal Requirements
[4] Sources of Information
[5] Record-Keeping and Disclosure
[6] International Tax Implications
[7] Executing Agreements
[8] Continuing Economic Incentives
[9] Protecting Intellectual Property
[10] Relationship Management
§ 5.06B Entrusting Tooling to Subcontractors
§ 5.07 Form: Computer Hardware Development and Manufacturing Agreement (Foreign Offshore Manufacturer)
§ 5.08 Form: Master Agreement for Software Services and License
§ 5.09 Form: Short- Form Software Marketing Services Agreement
§ 5.10 Form: Long-Form Software Marketing Services Agreement
§ 5.11 Form: Joint Technology Development and Transfer Agreement
§ 5.12 Form: Computer Hardware Distributorship Agreement
§ 5.13 Form: Joint Venture Technology License
§ 5.14 Form: International Distributor Candidate Questionnaire
§ 5.15 Form: Circuit Board Alliance Agreement
§ 5.16 Checklist for Intellectual Property Partnership and Joint Venture Agreements
§ 5.17 Form: Tooling Agreement
§ 5.18 Form: Reseller Agreement
§ 5.19 Form: License and Supply Agreement (Semiconductors; Joint Venture)
§ 5.20 Form: Relationship Agreement (Between Semiconductor Manufacturer and Search Engine Marketing Company)

CHAPTER 6
Selected Business Contracts

§ 6.01 Electronic Contracts and Signatures
§ 6.01A Software License Agreement
[1] Modifications to Source Code
[2] Work Product
[3] License Restrictions
[4] Customer Remedies; Exhibits
§ 6.02 Development/Work-for-Hire Agreement
[1]  Title
[2] Indemnification and Limitations on Remedies
[3] Statement of Work
§ 6.03 Equipment/Technology Lease
§ 6.04 Establishing Industry Standards
[1] Open Standards
[2] Non-Assertion of Intellectual Property Rights
[3] Trademark License
[4] Technical Standard; Development; Antitrust
§ 6.05 Internet-Web Hosting and Transaction Services Agreement
[1] Overview
[2] The Internet Defined
[3] Services Offered by ISPs
[4] Related Contract Terms and Liability-Minimizing Steps
[5] Developing Areas of the Law
§ 6.05A Internet Strategic Alliances
[1] Introduction
[2] Key Business Issues
§ 6.05B Managing Exchange Rate Risk in Commercial Contracts
§ 6.06 Form: Software License Agreement
§ 6.06 Form: Software License Agreement
§ 6.07 Form: Technical Development/Work-for-Hire Agreement
§ 6.08 Form: Technology Equipment Lease
§ 6.09 Form: License of Technology and Non-Assertion of Intellectual Property Rights
§ 6.10 Form: Web Site Hosting Agreement
§ 6.11 Form: Comprehensive Web Services Agreement
§ 6.12 Form: Outsourced Software Programming Agreement (Vendor-Centric)
§ 6.13 Form: Source Code License Agreement
§ 6.14 Form: Domain Name Assignment Agreement
§ 6.15 Form: Exchange Rate Addendum
§ 6.16 Form: Web Site Development Agreement
§ 6.17 Form: Distribution and License Agreement (Secondary Fermentation of Heterogeneous Microbial Cultures)
§ 6.18 Form: Manufacturing Services Agreement (Electronics)
§ 6.19 Form: Trademark and Domain Name Licensing Agreement
§ 6.20 Form: Outsourced Software Programming Agreement (Client-Centric)
§ 6.21 Form: Surgical Robot Purchase Agreement

CHAPTER 7
Intellectual Property

§ 7.01 Overview
§ 7.02 A Primer on Intellectual Property (Using an Illustrative Hypothetical Example)
§ 7.03 Patents
[1] Items That Can Be Patented
[2]  General Principles
[3]  Steps to Obtain Copyright Protection
[4]  Infringement Analysis
[5]  American Inventors Protection Act
§ 7.04 Trademarks
[1] Items That Can Be Protected as Trademarks
[2] General Principles
[3] Product Identification
[4] Steps to Obtain and Keep Trademark Protection
§ 7.05 Copyrights
[1] Items That Can Be Copyrighted
[2] General Principles
[3] Steps to Obtain Patent Protection
[4] Infringement Analysis
§ 7.06 Information Held as a Fiduciary
[1] Types of Information That Can Be Protected
[2] General Principles
[3] Steps to Obtain and Keep Trade Secret Protection: Security Against Disclosure by Non-Employees
§ 7.07 Trade Secrets
[1] Types of Information Subject to Fiduciary Law
[2] General Principles
[3] Steps to Maintain the Confidentiality of Information Subject to Fiduciary Law
[4] Steps to Obtain and Keep Trade Secret Protection: Security Against Disclosures by Employees
[5] Steps to Obtain and Keep Trade Secret Protection: Security Coordinators
§ 7.08 Intellectual Property on the Internet
[1] Introduction
[2] Metatags and Trademark Infringement
[3] Internet File Sharing, Contributory Infringement and Fair Use of Copyrighted Material
[4] Blogs, RSS Feeds and Podcasts

§ 7.09 Biotechnology
[1] Overview
[2] History of United States Patent Protection for Organisms
[3] A Brief Explanation of Biotechnology
[4] Special Application of Intellectual Property Law to Biotechnology
[5] Inventorship
[6] Utility
[7] Obviousness
[8] Enablement
[9] Licensing
[10] Infringement
§ 7.10 Mask Works
[1] Defined
[2] Protection Compared to Copyright, Patent Law
[3] Scope, Duration of Protection
§ 7.11 The Economic Espionage Act of 1996
[1] Introduction
[2] Theft of Trade Secrets on Behalf of or for the Benefit of a Foreign Government
[3] Theft of Trade Secrets for Purely Economic or Commercial Reasons
[4] Trade Secrets Defined
[5] Penalties and Other Provisions
[6] Elements Required for Conviction
[7] A Two-Edged Sword
§ 7.12 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
[1] Overview
[2] Standards for Protection
[3] Enforcement
[4] Dispute Settlement
[5] General Provisions
[6] Substantive Standards of Protection
[7] Enforcement and Remedies
[8] Miscellaneous Provisions
§ 7.13 Intellectual Property as Collateral
§ 7.14 Form: Patent License and Development Agreement (for License and Commercial Development of University-Based Research)
§ 7.15 Form: Patent Use Analysis Worksheet
§ 7.16 Form: Patent Cross-License Agreement
§ 7.17 Form: Employee Policy for Information Security
§ 7.18 Form: Collateral Assignment of Intellectual Property

CHAPTER 8
The Regulatory Environment

§ 8.01 Overview
§ 8.02 Bankruptcy and Licensing of Intellectual Property
[1] Executory Contracts
[2] Exclusive Licenses as Property Transfers
[3] Trademarks
[4] Bundled Rights
[5] Assignment
§ 8.03 Antitrust and Licensing of Intellectual Property
§ 8.04 Antitrust and Joint Ventures, Strategic Partnering, and Other Collaborations Between Competitors
§ 8.05 Electronic Health Records
[1] Overview
[2] Professional Liability
[3] Confidentiality
[4] Reliability
§ 8.06 Privacy and the Internet
[1] Scope
[2] Internet Privacy Policies
[3] Federal Legislation
[4] European Union
[5] CAN-SPAM Act of 2003
[6] California Web Site Vulnerability Disclosure
§ 8.07 Professional Responsibility and Lawyers Use of the Internet
[1] Ethical Issues
[2] Attorney Web Sites
[3] Online Establishment of Attorney-Client Relationships
[4] Information Security
§ 8.08 High-Tech Environmental Problems
[1] An Emerging Problem
[2] European Union Regulations: The WEEE Directive and RoHS
[3] Industry Response
§ 8.09 The Foreign Corrupt Practices Act
[1] Purpose and Coverage
[2] Accounting Standards
[3] Anti-Bribery Regulations
§ 8.10 The OECD Anti-Bribery Convention
§ 8.11 Export Controls on Technology
[1] Export Defined
[2] Jurisdiction
[3] Regulatory Framework
[4] Export Restrictions
[5] Exceptions
[6] Export License Types and Term
[7] Application Process
[8] Denial and Appeal
[9] Internal Compliance Program
[10] Penalties
[11] Encryption Technology
§ 8.12 Import Controls on Technology
[1] Overview
[2] International Trade Commission (ITC)
[3] Other Sources of Authority
§ 8.13 Regulation of Foreign Direct Investment in the United States
[1] Overview
[2] The Exon-Florio Amendment
[3] Bureau of Economic Analysis; Reporting Requirements
[4] Penalties; Enforcement
§ 8.14 The Hart-Scott-Rodino Antitrust Improvements Act of 1976
[1] Overview
[2] Transactions That Must Be Reported
[3] Exceptions to the Reporting Requirements
[4] Procedure for Filing; Fees
[5] Waiting Periods
[6] Required Information
§ 8.15 Form: Sample Exon-Florio Notice
§ 8.16 Form: Sample Hart-Scott-Rodino Item 4(c) Memoranda
[1] Long Form
[2] Short Form
§ 8.17 Form: Sample Web Site Privacy Statement
§ 8.18 Form: Foreign Corrupt Practices Act—Corporate Policy

CHAPTER 9
Employee and Related Matters

§ 9.01 Importance of Employee Matters to Technology Companies
§ 9.02 First Steps: the New-Hire Agreement
[1] Selected Issues Related to Enforceability of Employment Agreements
[2] The “Reasonableness” Standard
[3] Special Issues Related to Noncompetition Covenants
§ 9.03 Employment Letters and Agreements
[1] Termination with and Without Cause
[2] Scope of Other Business Activities
[3] Compensation
[4] Noncompetition, Confidentiality and Disclosure of Inventions
[5] Dispute Resolution
§ 9.04 Alternatives to the Traditional Employer-Employee Relationship
[1] Overview
[2] Selected Alternatives for Meeting Workforce Needs
[3] Subcontracting
[4] Independent Contractor
[5] Protecting Intellectual Property
[6] Nondisclosure, Noncompete and Non-Solicitation Agreements
[7] The Fair Labor Standards Act Exemption
[8] Reduction in Force (RIF) Considerations
§ 9.05 The Evolving Role of Stock Options in Employee Compensation
[1] Overview
[2] Qualified Stock Options
[3] Nonqualified Stock Options
[4] Stock Appreciation Rights (SARs), Phantom Stock, and Similar Equity Participation Interests
§ 9.06 Employee Stock Ownership Plans (ESOPs)
§ 9.07 Compliance with Federal Securities Law
§ 9.08 Documenting the Stock Option Plan
[1] Mandatory Compensation Deduction Limits
[2] Plan Term: Administration
[3] The “Option Pool”: Shares Available for Grant
[4] Automatic and Discretionary Adjustments to Authorized Shares for Dilutive Events
[5] Defining the Key Attributes of the Option Grant
[6] Vesting
[7] Mechanics of Exercise, Expiration and Forfeiture
§ 9.09 Employee Monitoring and Testing
[1] Monitoring Office and Cellular Phones
[2] Desktop, Laptop and Handheld Computer Device Monitoring
[3] Text Messages, E-mail and Voice Mail
[4] Creating Employee Expectations of Privacy
[5] Background Checks
§ 9.10 Social Responsibility
[1] Overview
[2] Potential for Employee Abuse in the Developing World
[3] Outsourcing to Original Equipment Manufacturers (OEMs)
[4] Developing Country: Laws and Enforcement
[5] Emerging Global Industry Standards
§ 9.11 Form: Individual New-Hire Agreement
§ 9.12 Form: Employment Agreement
§ 9.13 Form: Employee Stock Option Plan (General)
§ 9.14 Form: Non-Employee Director Stock Option Plan (General)
§ 9.15 Form: Employee Stock Option Agreement (General)
§ 9.16 Form: Non-Employee Director Stock Option Agreement (General)
§ 9.17 Form: Employee Stock Option Informational Document (Public Company)
§ 9.18 Form: Non-Employee Director Stock Option Informational Document (Public Company)
§ 9.19 Employee Restrictive Covenants
§ 9.20 Form: Employee Retention Agreement

CHAPTER 10
Selected Issues for the Public Technology Company

§ 10.01 Introduction and Overview
§ 10.02 The “Strike Suit” Phenomena
§ 10.03 Voluntary Disclosure by Publicly Traded Technology Companies
[1] Overview
[2] Securities Exchange Rule 10b-5
[3] National Securities Exchange Regulations
§ 10.04 Disclosure of Soft Information
[1] Overview
[2] The “Bespeaks Caution” Doctrine
[3] The Private Securities Litigation Reform Act (PSLRA) of 1995
§ 10.05 Practical Guidelines for Certain Types of Communications
[1] Guidelines for Written Disclosures
[2] Special Considerations for Internet Disclosure
[3] Guidelines for Oral Disclosures
§ 10.06 Securities Class Actions
[1] The Shift in Suits from Federal to State Courts
[2] National Uniform Class Action Standards Legislation
§ 10.07 Communications with Analysts
[1] Overview
[2] Liability Under Rule 10b-5
[3] Liability Arising from Entanglement with, or Adoption of, Analysts’ Forecasts
§ 10.08 Federal Securities Laws Considerations
[1] Overview
[2] Officers, Directors, Large Shareholders and Other “Insiders”
[3] Recommended Internal Company Procedures
[4] Conclusion
§ 10.09 Form: Selected Risk Factors—Software Company
§ 10.10 Form: Selected Risk Factors—Telecommunications Company
§ 10.11 Insider Trading Policy Memo for Employees
§ 10.12 Form: Insider Trading Policy
§ 10.13 Form: Comprehensive Pre-IPO Employee Memorandum
§ 10.14 Form: Memorandum Regarding Public Company Obligations
§ 10.15 Form: Limitation on Disposition of Securities Memorandum
§ 10.16 Form: IPO Time and Responsibility Schedule
§ 10.17  Form: Selected Risk Factors—Electronics Design and Manufacturing Services Company

Glossaries

INDEX