GROWING A MOVING COMPANY TAKES HEAVY LIFTING STRATEGIES FROM 3 - PDF document

September–October 2017 The Magazine of the American Moving & Storage Association GROWING A MOVING COMPANY TAKES HEAVY LIFTING STRATEGIES FROM 3 COMPANIES THAT EXPANDED THEIR MOVING AND STORAGE BUSINESSES Moving.org —30— —38— —46— —48— SUPPLIER PROFILE CONTRACT TIPS ON THE HILL FAST FACTS Rand McNally Avoiding Patent Trolls Milotte Joins AMSA Drone Revolution

PATENT TROLLS VS. TRANSPORTATION COMPANIES CONTRACT TIPS TO HELP AVOID PAYING THE TOLL T By Jonathan Todd and Justin Clark ransportation companies have been widely reported as targeting the become prime targets for transportation and logistics sector. patent infringement lawsuits For example, a nonpracticing irm in recent years. Some mistakenly known as Shipping and Transit LLC assume that technology companies was America’s biggest iler of patent SEPTEMBER | OCTOBER 2017 are the only companies subject to suits in 2016. Shipping and Transit has infringement claims. However, the use been threatening to ile lawsuits and, of any alleged infringing technology or in fact, litigating against companies service also subjects transportation and that provide notiication of deliveries logistics providers to expensive lawsuits to customers. Telematics, geofencing and licensing fees. and asset tracking—whether cellular or satellite—are also hot areas for WHY ARE TRANSPORTATION alleging infringement in the transpor- COMPANIES TARGETED? tation ield. Patent trolls (or nonpracticing entities) The growth in patent troll activity 38 operate on the business model of hold- in the transportation ield is due in ing patent portfolios in the sole interest large part to recent changes in the Direction of monetization through litigation. A way transportation and logistics pro- number of patent troll plaintifs have viders conduct business. Technology

39 Direction SEPTEMBER | OCTOBER 2017

is an increasingly signiicant part of not violate the intellectual property Unsuspecting trans- today’s transportation value propo- or other proprietary rights of any sition, in which optimizing logistics third party in any jurisdiction of portation companies networks is essential to driving use. This gives buyers or licensees eiciencies in the supply chains they the peace of mind that the vendor typically learn that support. The Transportation (TMS), stands behind its products and Warehouse (WMS) and Order (OMS) warrants the right of use. they are targeted by • Indemniication: Negotiate broad Management Systems implemented or homegrown in transportation defense and indemnity in the event patent trolls when providers invariably are either propri- of any intellectual property claim etary or use licensed technology. In arising out of or relating to use of they receive cleverly either case, the patent trolls may come the technology. Indemniication knocking based on the actual func- provisions often include speciic worded “licensing tionality provided by the technology. procedures regarding notice and If patent infringement is alleged, then defense, which will provide a opportunity” letters the transportation provider instantly roadmap for how the vendor will becomes a potential defendant by respond in the event of a claim. from the plaintiff’s • Limitations of Liability: Avoid any virtue of its mere use of the subject technology. limitation of liability to the vendor’s attorneys demand- obligation of indemnity against TARGETING SMALLER COMPANIES third-party intellectual property ing the payment Transportation defendants are often claims, including limitation to avail- small or midsize companies that are able insurance. The cost of defense of license fees in more likely to respond to intimidation and indemnity can run to well over by negotiating a settlement involving $1 million, leaving the buyer without settlement. the payment of a license fee rather recourse beyond a limitation. than facing the uncertainties of patent litigation. Patent trolls know this Transportation companies that are reality all too well, and they use it to engaged in hardware and software If your transportation and logistics their advantage. Many transportation license, lease or development should technology draws the aim of a patent defendants ind that they did not pay consult with an experienced attorney troll, your attorney will assist in close attention to reviewing and nego- to review and negotiate these and conducting an audit of the underlying tiating the relevant provisions in their other contract provisions to ensure technologies as well as the licenses and contracts when purchasing the under- the greatest protection. other contracts (including development lying technology. All are astonished by agreements) supporting those technol- HAVE AN UNDERLYING the license fees demanded for past and ogies. Your technology providers will TECHNOLOGY CONTRACT future use of the underlying tech- be put on notice as soon as possible of nology, which can easily exceed tens Unsuspecting transportation com- the alleged infringement in accordance of thousands of dollars as the cost to panies typically learn they are being with the indemniication provisions continue conducting business as usual. targeted by patent trolls via cleverly found in your contracts. With well- The best way a transportation and worded “licensing opportunity” drafted contracts, your technology SEPTEMBER | OCTOBER 2017 logistics provider can protect itself letters from the plaintif’s attorneys, providers may bear the entire defense from the license fees, court costs and demanding the payment of license and associated costs of litigation. damages is to carefully negotiate the fees in settlement. More aggressive This, of course, is what you would technology agreements that support patent trolls will sometimes initiate expect from vendors providing your hardware and software license, lease or negotiations with the iling of a suit. mission-critical technologies. n development. The following are the In either case, the patent troll busi- most important user-favorable clauses ness model is based on one goal—to that can often help protect the buyer or earn the highest fees as quickly as Jonathan Todd is of counsel with the licensee of technology. possible. Transportation companies national transportation and logistics practice want to end the threat of litigation as group of Benesch, Friedlander, Coplan & 40 • Representations and Warranties: quickly and inexpensively as possible. Aronof. Justin Clark is an associate with Require representations and The path to a swift and favorable the irm’s innovation, information technol- Direction warranties so the underlying tech- result lies squarely in the underlying ogy and intellectual property group. For nology and its functionality will technology contracts. more information, visit beneschlaw.com .