Direction September/October 2017 - 40

SEPTEMBER | OCTOBER 2017

is an increasingly significant part of
today's transportation value proposition, in which optimizing logistics
networks is essential to driving
efficiencies in the supply chains they
support. The Transportation (TMS),
Warehouse (WMS) and Order (OMS)
Management Systems implemented
or homegrown in transportation
providers invariably are either proprietary or use licensed technology. In
either case, the patent trolls may come
knocking based on the actual functionality provided by the technology.
If patent infringement is alleged, then
the transportation provider instantly
becomes a potential defendant by
virtue of its mere use of the subject
technology.

Direction

40

TARGETING SMALLER COMPANIES
Transportation defendants are often
small or midsize companies that are
more likely to respond to intimidation
by negotiating a settlement involving
the payment of a license fee rather
than facing the uncertainties of patent
litigation. Patent trolls know this
reality all too well, and they use it to
their advantage. Many transportation
defendants find that they did not pay
close attention to reviewing and negotiating the relevant provisions in their
contracts when purchasing the underlying technology. All are astonished by
the license fees demanded for past and
future use of the underlying technology, which can easily exceed tens
of thousands of dollars as the cost to
continue conducting business as usual.
The best way a transportation and
logistics provider can protect itself
from the license fees, court costs and
damages is to carefully negotiate the
technology agreements that support
hardware and software license, lease or
development. The following are the
most important user-favorable clauses
that can often help protect the buyer or
licensee of technology.
* Representations and Warranties:
Require representations and
warranties so the underlying technology and its functionality will

not violate the intellectual property
or other proprietary rights of any
third party in any jurisdiction of
use. This gives buyers or licensees
the peace of mind that the vendor
stands behind its products and
warrants the right of use.
* Indemnification: Negotiate broad
defense and indemnity in the event
of any intellectual property claim
arising out of or relating to use of
the technology. Indemnification
provisions often include specific
procedures regarding notice and
defense, which will provide a
roadmap for how the vendor will
respond in the event of a claim.
* Limitations of Liability: Avoid any
limitation of liability to the vendor's
obligation of indemnity against
third-party intellectual property
claims, including limitation to available insurance. The cost of defense
and indemnity can run to well over
$1 million, leaving the buyer without
recourse beyond a limitation.
Transportation companies that are
engaged in hardware and software
license, lease or development should
consult with an experienced attorney
to review and negotiate these and
other contract provisions to ensure
the greatest protection.
HAVE AN UNDERLYING
TECHNOLOGY CONTRACT
Unsuspecting transportation companies typically learn they are being
targeted by patent trolls via cleverly
worded "licensing opportunity"
letters from the plaintiff's attorneys,
demanding the payment of license
fees in settlement. More aggressive
patent trolls will sometimes initiate
negotiations with the filing of a suit.
In either case, the patent troll business model is based on one goal-to
earn the highest fees as quickly as
possible. Transportation companies
want to end the threat of litigation as
quickly and inexpensively as possible.
The path to a swift and favorable
result lies squarely in the underlying
technology contracts.

Unsuspecting transportation companies
typically learn that
they are targeted by
patent trolls when
they receive cleverly
worded "licensing
opportunity" letters
from the plaintiff's
attorneys demanding the payment
of license fees in
settlement.
If your transportation and logistics
technology draws the aim of a patent
troll, your attorney will assist in
conducting an audit of the underlying
technologies as well as the licenses and
other contracts (including development
agreements) supporting those technologies. Your technology providers will
be put on notice as soon as possible of
the alleged infringement in accordance
with the indemnification provisions
found in your contracts. With welldrafted contracts, your technology
providers may bear the entire defense
and associated costs of litigation.
This, of course, is what you would
expect from vendors providing your
mission-critical technologies. n
Jonathan Todd is of counsel with the
national transportation and logistics practice
group of Benesch, Friedlander, Coplan &
Aronoff. Justin Clark is an associate with
the firm's innovation, information technology and intellectual property group. For
more information, visit beneschlaw.com.


http://www.beneschlaw.com

Table of Contents for the Digital Edition of Direction September/October 2017

From the President
Industry News
What's New at AMSA
Supplier Profile
Growing a Moving Company Takes Heavy Lifting
Patent Trolls vs. Transportation Companies
Washington Watch
Fast Facts
Advertisers' Index
Direction September/October 2017 - Cover1
Direction September/October 2017 - Cover2
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Direction September/October 2017 - 7
Direction September/October 2017 - From the President
Direction September/October 2017 - 9
Direction September/October 2017 - Industry News
Direction September/October 2017 - 11
Direction September/October 2017 - 12
Direction September/October 2017 - 13
Direction September/October 2017 - What's New at AMSA
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Direction September/October 2017 - Supplier Profile
Direction September/October 2017 - 31
Direction September/October 2017 - Growing a Moving Company Takes Heavy Lifting
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Direction September/October 2017 - 35
Direction September/October 2017 - 36
Direction September/October 2017 - 37
Direction September/October 2017 - Patent Trolls vs. Transportation Companies
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Direction September/October 2017 - Washington Watch
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Direction September/October 2017 - Advertisers' Index
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