Reasons To Use a Technology Transactions Attorney

Signing contract

By Hunter Farrell

When technology companies are ready to form a legal entity, raise funds from angel investors or private equity, or sell themselves to an acquirer, they typically find an experienced corporate attorney to handle the matter.  However, when they are contemplating entering into transactions to buy, sell, license or develop the technology-based products or services necessary to operate their day-to-day business – transactions that, in the aggregate, are crucial to the ongoing survival of the company – they often decide that they can handle the deals through the use of non-specialist attorneys or, worse, standard forms downloaded from the Internet.

I think there are some critical, significant benefits to using a technology transactions (“TT”) attorney, however.

Non-TT Attorneys May Be Less Familiar with Industry-Specific Issues and Risks

Technology companies that already have corporate counsel handling corporate formation, governance or financing matters sometimes decide that it would be more efficient and cost-effective simply to have the corporate counsel manage licensing and other technology transactions.  Alternatively, some companies decide that it would be cheaper to farm the project out to generalist attorneys available through legal temporary placement agencies or through foreign legal outsourcing arrangements.

But different industries in the technology space have very different business models.  Accordingly, in each industry sector there are different standard legal and business issues and risks that are critically important.  A TT attorney who has had extensive, repeated exposure to transactions in a specific industry will generally be more familiar with, and have a more nuanced understanding of, business practices and contractual issues and risks for that industry.  This allows the TT specialist to advise clients on industry norms and establish the most favorable business terms.  Corporate attorneys, generalist “temp” attorneys and outsourced foreign attorneys don’t normally have the same regular exposure to transactions in an industry and may have little or no awareness of certain key issues and risks.

Downloaded Form Agreements Must Be Appropriately Adapted and Negotiated

Early-stage companies sometimes see the wealth of contract forms available on the Internet and conclude that it would be quicker, cheaper and nearly as effective to download a form and paper a transaction without the assistance of an attorney.  While it is true that a wide range of high-quality, industry-specific form agreements are available on the Internet, these forms cannot often be used properly as an “off-the-rack” solution.

First, except in the most basic transactions (e.g., a simple assignment of a domain-name registration), technology deals generally have numerous unique deal terms.  A downloaded form is very rarely going to match all of these terms perfectly.  Thus the form is typically going to require significant adjustment of numerous interrelated provisions.  It may also be the case that the selected form is not entirely appropriate for the client’s deal.  A TT attorney who regularly drafts and edits transactional agreements is likely to do a significantly better job of ensuring that the selected form is appropriate for the deal and client, and that any adjustments are made with clear, industry appropriate language that minimizes legal risk and results in a consistent overall agreement.

Second, when a non-lawyer sends out a downloaded form for a deal, an attorney representing the other side may decide to make significant modifications to the form.  The non-lawyer is then faced with the challenge of analyzing the risks and issues created by the changes and negotiating appropriate compromises.  A TT attorney who routinely negotiates agreements in the industry will be more effective at spotting and negotiating any issues and proposing substitute language.  This levels the playing field when negotiating with much larger companies that are represented by sophisticated counsel.

Avoiding Critical Mistakes

At this point, you might be thinking, “Does it really matter if the contract is not perfect?  If it covers all of my key business terms, is it really important to obsess about obscure risks and minor inconsistencies?  Life has some risks, and I know a lot of companies that get by fine without paying a specialized attorney to review this stuff.”  My response is:  while it is likely that nothing bad will happen, do you really want to roll the dice with your core IP assets or the critical vendor products and services you need to operate your business efficiently?

As the saying goes, it’s not a problem until it becomes a problem.  If the business relationship unfolds as planned, you might never find out if your agreement is full of holes.  When a relationship sours or a third-party lawsuit comes out of left field, however, one of the first things the parties will do is reach for the contract.  If that document doesn’t correctly specify the appropriate transfer of rights, performance obligations of the parties, or limitations of liability, for example, it is too late to fix those problems after a dispute has started.  And those gaps in the contract can have major consequences for the ongoing survival of the business.  In future blog posts, I plan to delve into some specific types of contracts and highlight some areas in which inadequate language can cause real problems.

Lawyers That Actually Help Drive Revenue!

One final point I want to make is that a well-crafted contract, or contracting strategy, can help a business work more efficiently, earn more revenue and/or reduce costs.  A TT attorney who is more familiar with contractual norms for the industry can help a client get a better economic deal.  In addition, a clearly written agreement that spells out all of the necessary performance obligations of the parties will help facilitate a smooth working relationship between the parties and avoid squabbling about ill-defined responsibilities.  As a result, the company operates its business with fewer expensive delays.

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The Role of a Technology Transactions Attorney


By Hunter Farrell

About ten years ago, I went to a meeting at a prominent Los Angeles law firm to negotiate a license agreement.  At the meeting, two partners from the firm’s intellectual property group represented the company on the other side of the deal.  When I explained to them that I specialize in technology transactions law, they were completely baffled and asked numerous questions about the scope of my practice.

More recently, during my time networking in the L.A. technology community, I have found that many companies here don’t use technology transactions (“TT”) attorneys.  They understand the need to use corporate attorneys for formation, governance, financing and M&A, but they don’t understand what a TT attorney is or the benefits of using one.

In this post, I want to explain briefly the role of a TT attorney.  In my next post, I will discuss why companies should carefully think about using a TT specialist.

A TT attorney is a specialist in handling commercial transactions that involve the development, acquisition, use and/or commercial exploitation of technology and intellectual property assets.  The TT attorney assists clients in the these transactions by structuring, drafting and negotiating contracts, as well as by providing strategic guidance and advice.

The following are examples of transactions and matters that a TT specialist typically handles:

  • professional services and consulting relationships
  • software-as-a-service (SaaS) customer relationships
  • data and content licensing
  • software, website, mobile apps and video game development and distribution
  • online advertising and marketing services, including SEM/SEO
  • non-disclosure and confidentiality
  • source code escrow
  • strategic relationships and joint ventures with a technology focus
  • manufacturing and other sourcing agreements
  • intellectual property asset purchases and sales
  • online terms and conditions
  • advice regarding privacy and the protection of intellectual property rights

As this list shows, the TT attorney helps the client buy, sell, license or develop the technology-based products or services necessary for the client to operate its day-to-day business.

In my opinion, a pure TT practice does not directly handle other matters such as corporate finance, mergers and acquisitions, securities, corporate governance, employee compensation, tax, real estate or litigation.   So, for example, TT attorneys do not normally manage corporate acquisitions or private equity financings.  However, the TT specialist should have sufficient familiarity to collaborate effectively with specialists in those areas as the need arises.  As part of a corporate acquisition, for example, the mergers and acquisition team may bring in the TT attorney to assist with the interpretation of licenses previously drafted by the TT attorney or to put in place missing license agreements necessary for the acquisition to move forward.

Often, TT specialists have worked as a lawyer (or, in some cases, as a non-lawyer) at a technology company.  I think this experience is extremely beneficial, as it allows the TT attorney to have a better understanding of the needs and roles of the executive, business development, sales, IT and marketing teams at client companies.  Attorneys who have worked as in-house counsel will also have greater insight into the pacing and efficiency that clients expect in technology deals.

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Important COPPA Update

Child with Laptop

By Hunter Farrell

Significant revisions to the Children’s Online Privacy Protection Rule, issued by the Federal Trade Commission, took effect on July 1, 2013.  In accordance with the Children’s Online Privacy Protection Act (“COPPA”), the FTC amended the Rule to improve protections for personal information of children in response to changes in online technology.  The summary section of the Rule states:

“The final amended Rule includes modifications to the definitions of operator, personal information, and Web site or online service directed to children. The amended Rule also updates the requirements set forth in the notice, parental consent, confidentiality and security, and safe harbor provisions, and adds a new provision addressing data retention and deletion.”

The full text of the final amended Rule and supplementary information are available here:  The following article provides an good summary of the amendments:  Online providers that may be collecting information from children should closely review their data collection and retention practices in light of the new regulations.

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The Promise of Equity Crowdfunding

Signpost "Crowd Funding"

By Hunter Farrell

Lately at technology networking events in Los Angeles, it seems like every third company I talk to is developing a new type of crowdfunding platform.  The focus for these companies is the holy grail of crowdfunding:  a model that allows the members of the “crowd” to own an equity stake in the venture they are funding — rather than just to make a donation, as in the Kickstarter model.  Growing interest in equity-based crowdfunding stems from the federal JOBS Act, passed in 2012, which contains provisions aimed at allowing businesses to sell equity stakes and take loans through crowdfunding platforms.  I thought the following article gives a good overview of the relevant legislation and the status of the regulatory process (i.e., SEC rulemaking) necessary for full implementation:  I also saw an interesting article about how various state legislators may be taking equity crowdfunding legislation into their own hands:

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Some Simple Steps for Safe Harbor Protection Under the DMCA

port de doelan en bretagne

By Hunter Farrell

The Digital Millennium Copyright Act (“DMCA”), which amended the U.S. Copyright Act in 1998, specifies certain limitations on the liability of online service providers for copyright infringement.  One of these statutory limitations of liability pertains to the situation in which an online service provider has stored copyrighted material on its website or network at the direction of an end user (for example, the user has posted certain content to the service).  Subsection 512(c) of the Copyright Act limits the liability of the service provider, if, among other things, the service provider has:  (a) designated with the U.S. Copyright Office an agent to receive notifications of infringement claims; and (b) publicly posted this information on the service provider’s website.  The service provider cannot qualify for the the safe harbor protections of subsection 512(c) if it has not complied with these two requirements.

The U.S. Copyright office provides detailed information about the required process for designating an agent to receive infringement notices here:  To summarize, a form , which is available on Copyright Office website, must be completed and filed with the Copyright Office, together with a fee payable to the Register of Copyrights.  The form should be addressed to:  Copyright I&R/Recordation, P.O. Box 71537, Washington, DC 20024.  I would send it by certified mail, return receipt requested.  The basic fee, which is $105 at the time of this post, covers designation of an agent for one legal entity (i.e., the legal name of the filing organization).  If the filer wants to designate the same agent for its website domain or other names by which it is doing business, there is an additional fee.  To be thorough, I strongly recommend that the filer pay the extra fee to include both the legal name of the filer and the domain name(s) of its website(s) on the form.  The agent can be an employee of the filer or another trusted third-party representative.

Once the Copyright Office receives a properly completed agent designation form and correct fee, it will post a scan of the form on a public list that it maintains.  The list is available at:

Section 512(c) of the Copyright Act specifies some additional conditions that a service provider must meet to be able to qualify for the safe harbor protection.  These include taking prompt appropriate actions upon becoming aware of a claimed infringement and not receiving financial benefit from the infringing activity.  The statute also specifies notice and take-down procedures that the party claiming infringement and the service provider must follow.  Some companies take the extra step of incorporating these requirements and procedures into their online terms of service.

See the following official summary of the DMCA for more information:


I’m frequently surprised to see that certain technology companies that host or transmit end user content have not bothered to file the agent designation form with the Copyright Office and post the agent information on their websites.  In the event of an infringement claim regarding user content, failure to take these easy steps would result in the loss of a very important statutory limitation of liability.

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