California Bar Journal
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Always more to learn about contracts
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Dana ShultzI’ve negotiated many technology agreements lately. No matter how often I go through the process, there is more to learn. Here is a hodgepodge of insights.

A contract negotiator in Florida told me that her company requires a choice-of-law provision. While the company prefers New York, it will accept any state other than Califor-nia. The reason: California commercial law is perceived as too unpredictable.

INSIGHT: The memory of Rose Bird’s Supreme Court, and a perception of anti-corporation bias, still are fresh in the minds of lawyers in other states.

Rethinking intellectual property

A developer of software that helps employees learn company policies agreed to convert the software to HTML format for use on my client’s intranet. The client wanted the right to add to and alter the application as policies changed over time.

The developer’s president objected, claiming that the company does not provide source code and does not allow object code alteration or reverse engineering. I pointed out that once the application is ported to HTML, source code and object code no longer exist, and distinguishing between code and data is difficult, if not impossible.

The parties agreed that the client’s changes would be limited to altering text and links within modules. To maintain the architectural integrity of the application, only the developer would have the right to add modules or change their flow.

INSIGHT: As developers move applications from traditional operating systems to web-based networks, they need to rethink approaches to protecting intellectual property.

Confronting bureaucracy

My client agreed to provide technical services to a large, established company. In many regards, the company was forward-thinking. For example, all suppliers submit invoices via its web site, and the company pays all invoices electronically. The time and cost savings of electronic bill presentation and payment are clear and immediately recognized.

On the other hand, when it came to contract negotiation, the company was embarrassingly slow. Their negotiator had to take each round of issues to two attorneys. One addressed commercial issues, while the other addressed intellectual property. Also, a vice president entered the picture whenever business questions popped up.

Whereas my client and I could make decisions in a day or two, the other company took one to two weeks. For an agreement only five pages long!

INSIGHT: Technology is no match for an entrenched bureaucracy.

Appreciating Microsoft

My client was selected to port a financial software package to a new operating system. The client’s customer was a large, international company that uses Lotus WordPro for word processing.

This company knew that it had to convert documents to work with my client, who used Word.

Unfortunately, WordPro’s exports in Rich Text Format (.RTF) lost section numbering, and exports in Word format (.DOC) sometimes caused Word to crash.

INSIGHT: As obnoxious as Microsoft’s dirty tricks have been, the company is right when it says that a standardized operating system (Windows) and application (Word) have benefits for users.

If your practice includes contract negotiation, pay careful attention and look at the big picture. I suspect that you, too, will gain insights that you never expected.

Dana Shultz is an Oakland-based attorney and certified management consultant specializing in computer technology and the internet. He may be reached by at and on the web at