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A Guide to IT Contracting by Michael R. Overly, Matthew A. Karlyn

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xii  •  Contents
Chapter 12 Software Development Kit (SDK) Agreements ............ 141
Checklist ...................................................................................141
Overview ................................................................................... 142
Key Considerations and Essential Terms ............................. 143
Scope of License ..................................................................143
Ownership ...........................................................................143
Condentiality ....................................................................144
Compatibility Testing ........................................................144
Support .................................................................................144
Warranty Disclaimers ........................................................144
Limitations on Liability .....................................................145
Indemnication ..................................................................145
Export/Import ....................................................................145
Acquisition by Federal Government ................................145
Term and Termination ....................................................... 145
Summary ..................................................................................146
Chapter 13 Key Issues and Guiding Principles for Negotiating a
Software License or OEM Agreement .......................... 147
Checklist ...................................................................................147
Key Issues and Guiding Principles .......................................149
Initial Matters ..........................................................................149
Scope of License/Ownership ..................................................152
Pricing .......................................................................................152
Audit Rights .............................................................................153
Limitations of Liability ...........................................................153
Warranties ............................................................................... 154
Support and Maintenance; Professional Service
Rates ......................................................................................... 154
Payment ....................................................................................155
Term and Termination ...........................................................156
Infringement Indemnication...............................................156
Summary ..................................................................................157
Chapter 14 Drafting OEM Agreements (When the Company is
the OEM) ........................................................................ 159
Checklist ...................................................................................159
Contents •  xiii
Key Issues and Guiding Principles .......................................161
Determine the Scope of the Engagement ............................. 161
Customer Terms ......................................................................162
Territory .................................................................................... 162
Hardware Products .................................................................163
Exclusivity ................................................................................163
Supplier Product Changes ......................................................163
Support and Training .............................................................164
Condentiality .........................................................................164
Intellectual Property Issues ....................................................164
Warranties and Disclaimers ..................................................165
Limitations of Liability ...........................................................165
Indemnication .......................................................................165
Term and Termination ...........................................................166
Summary ..................................................................................166
Chapter 15 Original Equipment Manufacturer (OEM)
Agreements ..................................................................... 167
Checklist ...................................................................................167
Key Contractual Concerns from the Perspectives of
Both Parties .........................................................................167
Overview ................................................................................... 168
Key Contracting Concerns from the Perspectives of
Both Parties .........................................................................169
Summary ..................................................................................174
Chapter 16 Health Insurance Portability and Accountability Act
(HIPAA) Compliance ..................................................... 175
Checklist ...................................................................................175
Overview ...................................................................................178
Key Issues and Guiding Principles ...................................178
Who Are BAs? ..........................................................................178
What Can Happen to BAs at Fail to Comply with
HIPAA? .....................................................................................179
BA Requirements Under the New Security Breach
Notication Requirements .....................................................180
BA Requirements for Compliance with HIPAA
Security Rule ............................................................................182
xiv  •  Contents
Statutory Liability for Business Associate Agreement
Terms ......................................................................................... 182
BAA Compliance with HITECH Act Requirements .........183
Other New HIPAA Requirements ........................................184
Steps for Compliance for Breach Notication ..................... 185
Steps for Compliance with HIPAA Security Rule ..............186
Amendment of BAAs .............................................................. 187
Considerations for Inventory HIPAA-Related Policies ......188
Summary ..................................................................................188
Chapter 17 Reducing Security Risks in Information
Technology Contracts .................................................... 189
Checklist ...................................................................................189
Best Practices and Guiding Principles .................................192
Trade Secret Considerations ..................................................192
Copyright Considerations ......................................................193
Joint IP Considerations ...........................................................193
Policy on Embedded Open Source........................................193
Internal Procedures ................................................................. 193
Policies Following Infringement ...........................................194
Employees .................................................................................194
Employee Training and Communication .......................194
Contractual Protections.....................................................194
Nonemployees and Subcontractors ..................................195
Soware Distribution .............................................................195
Object Code vs. Source Code ............................................195
Language for License Agreements ...................................195
Nondisclosure Agreements ...............................................196
Audit Rights.........................................................................197
Foreign Jurisdictions ..........................................................197
Source Code Licenses ..............................................................197
Escrow the Source Code ....................................................197
Language for Source Code License Agreements ............197
Summary ..................................................................................199
Chapter 18 Website Assessment Audits ........................................... 201
Checklist ...................................................................................201
Overview .................................................................................. 203
Contents • xv
Key Issues and Guiding Principles ...................................... 204
Evaluate Your Website ...................................................... 204
Domain Names .................................................................. 204
Use of ird Party Trademarks ....................................... 205
Hyperlinks .......................................................................... 205
Content ................................................................................ 206
Visitor Uploads .................................................................. 207
Applicable Internet-Specic Laws ................................... 208
Terms and Conditions ...................................................... 209
Data Security and Privacy .................................................210
Insurance .............................................................................210
General Considerations .....................................................210
Summary ..................................................................................211
Chapter 19 Critical Considerations for Protecting IP in a
Software Development Environment ............................ 213
Checklist ...................................................................................213
Overview ...................................................................................216
Key Issues and Guiding Principles .......................................216
Vendor Due Diligence ........................................................ 216
Treatment of Data ............................................................... 217
Physical Security .................................................................218
Administrative Security ....................................................218
Technical Security ..............................................................219
Personnel Security ..............................................................219
Subcontractors ................................................................... 220
Scan for reats ................................................................. 220
Back-up and Disaster Recovery ....................................... 220
Condentiality ....................................................................221
Security Audits ....................................................................221
Warranties ...........................................................................221
Limitation of Liability ....................................................... 222
Termination ........................................................................ 222
Security Breach Notication ............................................ 222
Insurance ............................................................................ 222
Destruction of Data ........................................................... 222
Additional Considerations ............................................... 223
Summary ................................................................................. 223
xvi  •  Contents
Chapter 20 Transactions Involving Financial Services
Companies as the Customer ..........................................225
Checklist .................................................................................. 225
Overview .................................................................................. 227
ree Tools for Better Contracts .......................................... 228
Key Considerations ................................................................ 228
Summary ..................................................................................233
Chapter 21 Source Code Escrow Agreements .................................. 261
Checklist ...................................................................................261
Overview .................................................................................. 262
What Does It Mean to Escrow Source Code? ..................... 262
Types of Escrow Agreements ................................................ 263
Release Conditions ................................................................. 265
Key Issues for Escrow Agreements ...................................... 266
Summary ................................................................................. 269
Chapter 22 Integrating Information Security into the
Contracting Life Cycle ................................................... 271
Checklist ...................................................................................271
Overview ...................................................................................272
Due Diligence: e First Tool ................................................273
Key Contractual Protections: e Second Tool ..................274
Information Security Requirements Exhibit: e
ird Tool ................................................................................ 277
Summary ..................................................................................278
Chapter 23 Distribution Agreements ...............................................283
Checklist .................................................................................. 283
Overview .................................................................................. 284
Key Issues for Distribution Agreements ............................. 285
License Grant ..................................................................... 285
End User License Agreement ........................................... 287
Development of the Product ............................................ 287
End User Data .................................................................... 288
Obligations of the Parties ................................................. 288

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