Cyberlaw and the Global Economy 2003 > Lawful Intercept Drafting Exercise |
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Rotisserie Question
You are an associate in-house counsel for an IP-based network equipment manufacturer ("Vendor") that is exploring the introduction of lawful intercept technologies as part of its offerings to its customers. The counsel to a prospective large customer ("Buyer") has asked your company, Vendor, to agree to the following language as part of a master purchase agreement. The deal is very important to your CEO. If your company is able to close this deal successfully and quickly, the CEO will be able to announce the deal to analysts at a critical moment for the company in terms of securing a very favorable financing arrangement from some large banks. Buyer is a global company, headquartered in New York, as is your company. The governing law of the contract is New York. "Vendor warrants, represents and guarantees that all of the products it sells to Buyer under this Purchase Agreement shall be compliant with any and all applicable lawful intercept laws whether in existence now or in the future. To the extent Vendor breaches this section, and any of its products are found to be non-compliant with a lawful intercept law, Vendor shall immediately cause the relevant product to conform to those laws. In addition, Vendor shall indemnify, defend and hold harmless Buyer for all fines, penalties, damages, or claims sustained by Buyer arising out of Vendor's non-compliance with the terms of this section. Vendor shall dispatch an on-site technician to any of Buyer's sites which are unable to meet the technical requirements contained in an interception order issued by an authorized government agency or regulatory agency or regulatory body and shall use best efforts to fix the problem, including repairing or replacing the defective products." Please draft a memo to your company's Executive Vice President and General Counsel as to how your company should respond to this proposed contractual language. (Make reference, as needed, to the readings for this week's class 4.2. If you can't find a fact that you need to rely upon in the readings, please make it up and state your stipulation(s) in the text of the memo). As usual, the GC needs your memo pronto, so you only have a few days to come up with this memo to her (she's generously given you the weekend, but she needs the memo on Monday by 5:00 p.m.). If you miss the deadline, or you'll foul up the negotiations. She's a busy woman, so please stay within the prescribed word limit (250 - 1000 words). There are more questions (1): Expand All |
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The master buyers agreement seem to put too much risk on Vendor as it requires Vendor to warrants compliance with present and future lawful intercept laws.
To begin with, it More...
I concur with counsel insofar as compliance with potentially applicable laws will require a close working relationship with the buyer and significant technological challenges. An acknowledgment of this close working More...
In order to answer the question in a prompt manner, I have made the following assumptions. First, because Buyer is a global company I have assumed that they will be More...
With regard to the "future" term, the company must weigh two competing factors. First, the cost of ensuring continued compliance with possibly changing international LI laws is unpredictable. From a More...
Date: November 14, 2003
Memorandum
To: General Counsel
1. This is a preliminary written response to the matter of proposed contractual language and related matters. Please note that it only More...
The in-house counsel has correctly pointed out the uncertainties and risks to Vendor arising from the contractual language proposed by Buyer. We agree adding “on a reasonable timely basis” instead More...
Buyer’s proposed contractual language creates risks that Vendor must weigh against the financial and promotional benefits of the deal. I recommend:
- Verifying where Buyer does business and where it More...
I think that the General Counsel had some great ideas. I think it is a good idea to consult the Buyer and verify where it does business and where it More...
Dear Executive Vice President and General Counsel,
Based on the background information provided, I understand the Buyer is a global company offering IP-based services including Voice over IP, web hosting, More...
In general, I think this evaluation is directly on target. I have only two suggestions:
1. Warranties section:
“we could undertake to monitor the development of the relevant law in More...
The present contractual provision version of the buyer, clearly attempts to bring the vendor into a disadvantageous position imposing the costs of unanticipated risks and liabilities. There are four main More...
The shifting of the warranty to complicance with the technical specifications, rather than any specific laws does provide a much stronger limitation of liability. However, if the vendor and buyer More...
The proposed contractual language is overly broad and should be narrowed down at least in three aspects: compliance with law, damages and remedies, and maintenance.
1. Compliance with Law
We More...
I concur with the majority of Jinfei’s assessment with some specific reservations.
1a. We can be reasonably certain that CALEA regulations, if and when they are expanded to include our More...
To: Executive Vice President and General Counsel
Re: Amendments Required for Proposed Master Purchase Agreement
In response to the proposed master purchase agreement, Vendor should suggest significant amendments to the More...
To: Vendor's General Counsel
Associate counsel’s comments generally amount to sound legal advice and duly point out potential implications in allowing Buyer’s proposed contract term to be incorporated into the More...
Compliance Warranties
The first sentence of the Purchase Agreement contemplates that Vendor warrants that its products will not only be compliant with all current LI laws, but future LI laws More...
To a large extent, I fully agree with your in-house counsel’s proposal. I would like to make several supplements to following points:
1. Compliance warranties
I am also of the More...
Let's start with the first sentence: "Vendor warrants... that all of the products... shall be compliant with any an all applicable lawful intercept laws whether in existence now or in More...
In the most part I concur with the opinions stated in the memo.
I am not so sure that I would recommend the company to subject itself to any future More...
In determining how much liability Vendor should assume for Buyer’s compliance with lawful intercept regulations, Vendor must balance its interests in serving the clients’ wishes (viz. the increased sales to More...
I don’t know if in the long term it is best to see in definitional terms how we fit under CALEA as a telecom service or under ECPA as an More...
Re: Agreement with Buyer
1. Summary
The proposed clause is extremely favorable to Buyer since it allocates the whole risk for future problems regarding legal intercepts (“LI”) on Vendor. It More...
A well-organized, thorough response. Here are a few thoughts for reflection:
Strengths
· Limiting indemnification to exclude third-party considerations.
· Good catch on possible actions (negligence / intentional) by Buyer’s More...
In general, the proposed contracting language is (as should be expected) slanted towards the buyer in terms of benefits. Here are a few of the sections that potentially should be More...
The 4 responses to the general agreement all points to the same direction: Vendor is assuming too much liabilities. However, these liabilities are not all unreasonable.
Holding Vendor liable for More...
Memo
TO: Executive Vice President and General Council
From: H. Zhu
Re: Proposed contract clause with Buyer: Analysis and Recommendations
The proposed contract clause with the Buyer should NOT be More...
You make several good points. I absolutely agree that the scope and duration of our compliance warranty should be limited, but I disagree as to the extent you recommend for More...
While getting this deal is clearly crucial to our business, the contract language as suggested by Buyer is troublingly expansive. I think we would be wise to slough off some More...
My response below corresponds to each of the suggestions you've made.
1) "Shall be compliant" - Great point, but keep in mind that some jurisdictions like the United States impose More...
To: Mr. Executive Vice President and General Counsel, Esq.
In order to intelligently respond to the requested provision, we need to examine the risks our company faces should we accept More...
In general, I agree with much of the analysis used in this memo and think it is highly useful in terms of the response suggested to the proposed contractual language. More...
My concern is the provision pertaining to the FUTURE developments of the law. This puts our company at risk connected with something, which is unknown. This is a substantial risk. More...
Your internal counsel aptly identified the risk of being liable for compliance with future LI laws and suggested to confine the risk by putting a time limit on this liability. More...
To: Executive Vice President & General Counsel Nov. 17, 2003
From: Associate Counsel
Subject: Proposed Language by Buyer
It is well recognized that our LI technology strategy is to initiate More...
The memo does a good job on providing insights into the issue of addressing the risks arising out of lawful intercept laws. At the same time, there are some remarks More...
The "all applicable lawful intercept laws whether in existence now or in the future" is likely the broadest and most expensive clause in the memorandum. The U.K. has explicitly acknowledged More...
November 18, 2003
Dear Ms. (General Counsel),
As for the issue of compliance with law, I agree with the Memo of November 17, 2003 that Vendor shall not warrant full More...
It seems clear that, at the very least, these guarantees go far beyond what is necessary or even prudent. Indeed, this approach would require Vendor, for an indefinite period, to More...
Dear General Counsel:
I agree with the in-house counsel's decision to remove some of the contractual obligations placed on Vendor that far exceed its statutory obligations. Given the ambiguity and More...
To: John Palfrey, Exec. Vice-Pres./General Counsel for Vendor Systems
From: Evan Burnstein
Re: Proposed Contract with AOL (“Buyer”)
Word Count: 1033 (excluding contract quotations)
Background Issues
It is important to More...
Evan does an excellent job of emphasizing the careful balancing act that must be maintained between complying with LI regulations and respecting privacy rights. I agree that, given the current More...
The statutes governing lawful intercept are the Omnibus Crime and Control Bill of 1968 (Title III) and the Electronic Communications Privacy Act (ECPA). In relevant part, Title III deals with More...
Overall, I like this memo; it is well written and speaks to the relevant legal issues. I would consider three additional factors:
First, the contract is not a wash if More...
CONFIDENTIAL MEMO – NOT FOR CIRCULATION
TO: EVP & GC
FR: Joshua Gordon, Associate In-House Counsel
RE: Lawful intercept contractual language recommendations
In order to close the current deal while More...
In deciding whether to accept the language of the contract, it is important to assess the risks to the company of accepting the contractual language, as well as the consequences More...
I concur with the associate in-house counsel’s assessment of the contract: the contract is “one-sided” and “must be revised.” In concluding that the current contract is too broad, the memo More...
Dear Executive Vice-President/General Counsel:
With financing negotiations on the horizon, Vendor may find itself in the position to announce two exciting, related developments. First, Vendor’s introduction of a lawful intercept More...
1. I agree that Vendor's position is difficult because of the variety of regimes in different countries. The provision of the contract shifts this burden towards the seller.
2. In More...
The relevant laws for the purpose of evaluating the proposed contractual language are sections 3121-3127 of the Electronic Communications Privacy Act (“ECPA”) as amended by the USA Patriot Act of More...
First a disclaimer: I am not a lawyer-in-training, so I can only evaluate this as someone who was a consumer of legal advice similar to that given above.
The legal More...