Click or swipe to read our partners’ perspectives on:
- Electronic Payments
- Data Centers
- IP Transactions
- Privacy and Data Security
- Intellectual Property
- Anticorruption
- Antitrust
ELECTRONIC PAYMENTS
What is the next big thing in electronic payments? How will regulators keep up?
Thomas Brown
San Francisco
The next big thing in payments is really the continuation and acceleration of a trend that began decades ago. Technology is creating opportunities for commerce that did not exist even five years ago (e.g., oh, I’ll use an “app” to find a town car in a city that I’ve never visited when I land at the airport, and I’ll “pay” the town car driver without passing coins, cash, or cards to the driver when I get out of the car) and enabling electronic payment methods to displace more traditional means of payment (e.g., my 100-plus-year-old bay swimming and rowing club now uses Intuit to generate electronic invoices and collect electronic payments for its annual dues instead of sending paper invoices and collecting paper checks). Regulators cannot keep up if we understand “keep up” to mean precisely how commerce will evolve as new technologies come on line. Rather, they will keep up by monitoring advances in technology and thinking, hopefully in a clear-headed way, about how law and regulation needs to adjust (or not) to these advances.
Chris Daniel
Atlanta
The latest thing in e-payments is a convergence of trends leading to significant change in the payments sector. Notably, the rapid adoption of broadband, the increasing ubiquity of smartphones, the rise of the BRIC economies, and the willingness of large technology companies to become providers of payment services are materially modifying the payments landscape.
Moreover, payments are not just changing for those of us who already live fairly wired lives. The trends above will create tremendous market opportunities in those countries where there is limited financial infrastructure.
Lastly, regulators, by their own thoughtful admission, will always struggle to stay abreast of changes, particularly those occurring as quickly as what we are now witnessing. That being said, it should always be remembered that consumer financial services is highly regulated in almost every jurisdiction and one should assume that the regulators will interpret the statutes in their jurisdiction to apply to most any innovation in payments.
Next, read about Data Centers
DATA CENTERS
What impact will the infrastructure demands of Big Data have on the commercial property sector?
Steve Berkman
San Francisco
Big Data is already having an impact on commercial real estate; this impact will continue to grow over the next several years. As greater numbers of companies look to utilize Big Data within their business, the infrastructure needed to collect and analyze this data must continue to grow. This will result in continued growth in the number of data centers being built both in the U.S. and internationally. These extremely costly industrial-type facilities jammed with power and fiber capacity will be needed by businesses of all types, so that servers which allow the collection and analysis of Big Data can continuously operate without interruption and with maximum efficiency. Some large enterprises will choose to build their own data centers, but the vast majority will need to contract with a provider to secure a facility. As the data center asset class becomes more prevalent and better understood by institutional investors, continued investment will come from private equity and pension sponsors. As a corollary, due to increased demands and complexity, corporate users will be less likely to host their own data centers within their commercial office space, further reducing the office footprint and thus overall office property demand.
Next, read about IP Transactions
IP TRANSACTIONS
What are the best practices for companies that are bringing existing intellectual property into joint ventures and M&A transactions?
Jane Song
San Diego
Intellectual property (IP) can provide substantial competitive advantage to a business, and many high-profile M&A transactions that have occurred recently have been driven by IP. Companies that are planning on selling IP should be proactive and anticipate questions or issues that may be raised by a potential purchaser. It would be prudent for a seller to engage in some level of diligence of its own prior to offering the IP for sale, to ensure that it has clear title to the IP to be sold and establish whether there are any encumbrances on the IP. In many cases, issues with legal title to IP created on behalf of a seller can be resolved relatively easily. If there are any encumbrances on the IP, such as prior licenses or covenants not to sue that were granted to third parties, a seller should identify in advance who has received such rights, what rights have been granted, and whether any of those encumbrances may be alarming to a potential purchaser. Anticipating these IP issues in advance will make the process go a lot smoother and faster for the parties.
Next, read about Privacy and Data Security
PRIVACY AND DATA SECURITY
What are the most important things for companies to consider in managing data privacy and data security?
Behnam Dayanim
Washington, DC
There are many, but I will focus on two. First up is cyber-intrusion and protection of corporate assets — both intellectual property and even control of physical assets. More and more of these are managed remotely and susceptible to cyber-hijacking. With concerted attempts at cyber-espionage increasing, the pressure for legislative and regulatory mandates continues to mount. Corporate citizens — especially those with high-profile or sensitive intellectual property profiles — must consider their role in that policy debate, what steps they can take to collaborate with their peers and government, and what steps they can take themselves to bolster their protections. Sharing, in particular, carries with it a range of potential legal consequences that require thoughtful advice and deliberation.
Second, and on a dramatically different note, companies have largely not done an amazing job of managing the privacy and security challenges of social media. Social media provides substantial opportunities for engaging with the public, but also presents major legal and practical challenges in protecting corporate assets. Social media also raises interesting privacy concerns, for example when companies attempt to require access to employees’ or job applicants’ personal social media. We have advised companies attempting to navigate their way through those concerns.
Next, read about Intellectual Property
INTELLECTUAL PROPERTY
What has been the impact of recent litigation on the way tech companies manage their intellectual property?
Robert Masters
Washington, DC
Recent litigation has reinforced the value of IP, and the importance of owning a robust IP portfolio to compete in the market. Typically, the better portfolios are organically grown together with product development. However, if that is not possible or sufficient, then a company may seek to acquire a portfolio that covers the relevant product line. In the telecommunications industry, as one example, there have been recent portfolio acquisitions by companies to enter the market, and in some cases also to keep portfolios out of the hands of others. Thus, recent litigation has forced tech companies to manage their IP better and more actively, by building a portfolio that broadly covers the technology in their products through in-house procurement together with product development, or more quickly by acquisition. Such active management better positions tech companies to compete in the market, to maintain or gain market share, and to defend themselves against competitors.
Robin McGrath
Atlanta
The last few years have proven to be an exciting yet turbulent time for technology companies trying to keep pace with the myriad of changes within patent jurisprudence. With the rise in the number of patent trolls asserting their portfolios against wholesale industries, and high-stakes patent wars between competitive high-tech companies, companies are becoming more proactive and vigilant than ever in (i) building their own war chests of patents, both for offensive and defensive reasons, and (ii) engaging in extensive patent searching and investigation before acquiring new businesses or investing in new areas of technology.
Tech companies will also struggle to implement changes to their patent policies in light of the America Invents Act (AIA). While certain AIA provisions took effect in March 2012, the U.S. will switch from a “first to invent” to a “first to file” system. This change will undoubtedly lead technology companies to be much more diligent in getting their patent applications on file sooner, conducting invention workshops more frequently, reducing the time to review invention disclosures for patentable ideas, and authorizing the preparation of applications more quickly — all while trying to maintain the quality of their patent disclosures.
Next, read about Anticorruption
ANTICORRUPTION
Given how aggressively governments are pursuing anticorruption, what should technology companies be alert to?
Palmina Fava
New York
A significant risk area for tech companies is the use of third parties, particularly as sales intermediaries, in high corruption risk countries. In many such countries, tech companies cannot sell directly to end-user customers, thereby requiring them to utilize third-party sales intermediaries whose personnel, internal controls, and books and records are not under the companies’ control. Third parties — which may be beyond the reach of the FCPA and may be located in a country where anticorruption laws are not rigorously enforced — do not have the same incentives to abide by anticorruption restrictions as the tech companies that retain them. While many companies incorporate audit clauses in their contracts with third parties, those clauses are often difficult to enforce, creating further challenges in overseeing third parties and ensuring their compliance with anticorruption laws. These challenges make pre-contract due diligence, regular training, and immediate termination rights critical when working with third parties. These types of internal controls, coupled with other compliance protocols, may mitigate a tech company’s liability in anticorruption matters.
Next, read about Antitrust
ANTITRUST
What is the best way for companies in the technology media, and telecommunications sector to manage potential exposures to antitrust?
C. Scott Hataway
Washington, DC
The U.S. patent system is one of the great drivers of economic growth in the modern era. It has created an unrivaled environment of innovation, yielding benefits for consumers and producers alike. And though the patent right is meant to exclude, voluntary cooperation among patent holders has proven to be a critical step in combining individual inventions into the complex technological “standards” that lie at the heart of all modern gadgetry.
Despite the obvious benefits of innovation and cooperation, antitrust regulators continue to apply traditional competitive effects analysis in an effort to prevent harm to competition. In this environment, technology companies must carefully scrutinize all disclosures made during the standards setting process, the impact of F/RAND licensing commitments, and the effect of portfolio M&A activity on the creation and exercise of market power. Patent aggregation isn’t a new concept, but the increased sensitivity of litigants and enforcement agencies to aggregation issues should lead to increased pressure based on the application of antitrust theory.
Holly House
San Francisco
Many price-fixing cartel actions arise when technology companies face commoditization of their products and prices plunge. Concerned sales personnel grouse with their competition about how cutthroat competition is making matters worse. Meetings occur and documents are created where these rivals then discuss price ranges, capacity reductions, or other means to shore up margins or shares. These are the eventual evidence used by prosecutors and plaintiffs’ attorneys to show improper collusion — at enormous future cost to these companies (usually far in excess of any short-term financial benefits). Compliance programs that teach companies’ sales forces what communications are and aren’t legal or prudent and a robust document control protocol are essential to help avoid being ensnared in price-fixing litigation. For companies with large shares of any product or geographic market, learning — and then teaching company personnel — what sales promotions and techniques are off-limits to lock-in customers is also essential to prevent intrusive and expensive agency investigations and fines and the competitor suits that invariably accompany them.
