Convergence Of Mainstream Business Big Data And Clean Tech William A Tanenbaum

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  • Not my opinionsAcronyms, TLAAsk how many in audience are licensors, users, with companies, [Consider moving first two slides to end] Seeing eye dogNot my opinions
  • What did it used to be? Corporate “environmental managers” were generally limited to regulatory compliance functionFocus was on “keep company out of trouble,” but not involved in broader business affairsIntermediate stageFrom negative – avoiding reputational risks from environmental impactsTo positive – enhancing brand image and valueTo additive – expanding due diligence to evaluate whether the perceived premium cost for purchasing a manufacturing plant in the EU was offset by the value of the sellable carbon credits under the ETS Assessing the impact of product design, manufacturing processes, shipping, use of raw materials, and the rest of supply chain on (a) the costs and (b) the environment (and the regulatory and other costs of that) Assessing cost savings missed by not adopting energy efficiency and use of sustainable materialsCorporate benefits Role of outsourcing
  • Water used in mgf, either 300 to 1 beer gallons or 200 to 1; but illustrates effectRising populations and affluence in offshore countries
  • One source says energy costs are 30% of water management technologies From old slide on stimulus money for building retrofits What green building factors are driving new roles for outsourcing? Need to implement new technology to achieve reduced energy savings and ongoing cost savings Today’s business practices: Landlords are adopting energy smart technology to: Retain or attract tenants by reducing tenant operating costs Enable tenants to reduce carbon footprint – under standards applicable to office-based buildings Use of IT to introduce flexibility in place of simple on/off controls Use of outsourcing to upgrade
  • Not cover patentsNot necessary cover independent contractorsForeign scope can be is different Do you need to fight over ownership of custom improvements?
  • When indemnity without representation and warranty is OKDifferent monetary caps for regular breaches and IP infringementExclusions of combinations
  • Joint ownership Business man’s solution; seems fair, but not workable What happens to your trade secrets? Why single ownership and licenses can be better
  • Tie to cloudIntegrate with other licensed software
  • Convergence Of Mainstream Business Big Data And Clean Tech William A Tanenbaum

    1. 1. Convergence of MainstreamBusiness, Big Data and CleanTech William A. Tanenbaum Chair, Technology, Intellectual Property & Outsourcing Group Chair, GreenTech and Sustainability Group Kaye Scholer LLP New York and Palo Alto Offices
    2. 2. Key Points• Business drivers for convergence• Business models will change• IT-enabled technology and business practices• Big Data• Energy efficiency• Water is an energy problem, too• Supply Chain Sustainability 2 60639055
    3. 3. Key Points (2)• Outsourcing as a problem, solution and replacement business model• Cloud as infrastructure• Social Media as business tool• New Due Diligence• Drafting agreements• Offensive and Defensive IP 3 60639055
    4. 4. Business Drivers• Key indicator is that sustainability is moving from CSR to CFO – Does not depend on whether global warming exists – Not solely for reputational purposes• Key driver is economics• Perfect recessionary strategy – Increase efficiency, reduce costs, improve competitiveness • Parallels E-Commerce revolution – Energy/power – Water – Logistics – Supply chain savings 4 60639055
    5. 5. What are the Phases in Convergence?• Phase 1 – avoid EPA fines• Phase 2 – certain industries wanted to be carbon neutral to gain customers• Phase 3 – mainstream companies opportunistically adopt GreenTech to reduce costs• Phase 4 – mainstream companies strategically adopt GreenTech to gain competitive advantage• Phase 5 – innovations lead to IP issues –Especially collaborate improvements in outsourcing model 5 60639055
    6. 6. Business Models Will Change• “Just-in-time” business model as exemplar of what will change –Assumed fuel was inexpensive and emissions were free• Replaced with new delivery models• IT-enabled logistics scheduling 6 60639055
    7. 7. Big Data and Sustainability• What is “Big” about “Big Data”?• “Moneyball” vs. “Big Data”• What are examples of Big Data?• What is new about Big Data?• Technology implications• Social media implications – Privacy; terms of use• Integrated with “Cloud as Infrastructure”• Contract implications• Outsourcing implications 7 60639055
    8. 8. Green IT -- Data Center Operations• Data centers are often a corporation’s single largest source of energy consumption and, for some, the largest source of carbon emissions• EDS report called data centers the “SUVs” of high tech: accomplish much, but energy inefficient• If data centers were considered a separate industry, they would be the sixth largest electricity user (The 451 Group) 8 60639055
    9. 9. The Need for Useable Metrics Contract inGreen Outsourcing Contracts• Adapt EPEAT and DOE’s DC PRO software tool from Federal contracts and use them in private sector Green IT and outsourcing agreements – EPEAT = Electronic Protection Environmental Assessment Tool – DC PRO = Data center software assessment tool to benchmark data center energy use and efficiency• Advantages of EPEAT and DC PRO: – minimize contract negotiation time 9 60639055
    10. 10. Water: The New Scarce Resource• Global Warming, now Global Drying• Carbon Footprint, now Water Footprint• Business risks include – Scarcity – not enough – Quality – not good enough, and costs to improve it – Competition – among industry, agriculture, household use • Will increase costs – Regulatory compliance – will increase costs – Regulatory risks – loss of permits for water rights and discharge rights 10 60639055
    11. 11. Water: Supply Chain and Outsourcing Risks• Geo-social risks – cannot relocate factory• New Due Diligence questions – Adequate supply of water, now and in future – What are weather and climate change risks? – Cost of water treatment technology – Can permits be maintained or obtained?• These ripple through supply chain• Outsourcing as model for acquiring water treatment technology and services 11 60639055
    12. 12. Convergence of Water and EnergyEfficiency• More efficient use of available water requires adapting “smart grid” technology for water infrastructure• Water efficiency means factories will recycle and treat water• Water management technologies are energy intensive• For overall corporate sustainability, cannot adopt water treatment technology without considering energy efficiency• Next practice (or best practice) = combine water audits with energy audits• Audits using outsourcing 12 60639055
    13. 13. Water, Supply Chains and Outsourcing• Outsourcing is source of water problems• Outsourcing is also a solution to water problems 13 60639055
    14. 14. Sustainability in the Supply Chain -- TheTip of an Iceberg• Mainstream convergence means increasing sustainability in the supply chain• Customer perspective• Supplier perspective• A “customer” can also be supplier in larger supply chain 14 60639055
    15. 15. CDP Supply Chain Report• CDP commissioned A.T. Kearney to produce Supply Chain Report 2010 (www.cdproject.com)• 89% have strategy for addressing suppliers’ sustainability and emissions practices• 6% of those identified as leading companies in the CDP have already “deselected” suppliers for failure to be sustainable• 56% expect to deselect failing suppliers• Customers are beginning to rewrite contracts to impose sustainability requirements 15 60639055
    16. 16. Social Media as a Business Tool• Big Data – source of information• Key is analytics and decision making• Terms of use and privacy issues• Social Media and Outsourcing to Reduce Liability – HR outsourcing 16 60639055
    17. 17. Cloud Computing in Sustainability• “Cloud” = “Infrastructure as a Service”• Data from sensors, social media, supply chain, smartphones and mobile devices• Special cloud computing agreement issues – New Due Diligence questions – “Security as a Service”• Is Cloud robust enough for Big Data?• Combing cloud computing agreements with IT outsourcing agreements 17 60639055
    18. 18. Cloud Risks• Subcontractors• Financial viability• Good technology?• The risks introduced by technology• IP risks• Data access risk• Data sharing risks 18 60639055
    19. 19. New Due Diligence• Multiparty financial risk• Technology rights• Duration of validation of great withdrawal of data access privileges• Triggers for loss of key license rights• Data segregation• Litigation holds• Document retention• Regulatory Compliance 19 60639055
    20. 20. IP Issues• Different IP rights apply simultaneously to licensed subject matter• Patent• Copyright• Trade Secret• Trademark and Service Mark 20 60639055
    21. 21. Problem No. 1: Work Made for Hire• Limitations of the Work Made for Hire Rule• Why getting an assignment is often best 21 60639055
    22. 22. Problem No. 2: IP Indemnities• Provider’s right to terminate in event of IP claim can be a bridge too far• When provider will ask the customer to provide an indemnity 22 60639055
    23. 23. Problem No. 3: Joint Ownership• Collaborate improvements• Unexpected license by one co-owner to competitor of the other co-owner• Difference between patent inventorship and copyright authorship 23 60639055
    24. 24. Problem No. 4: Covenants Not to Sue• When they are needed• How to document them 24 60639055
    25. 25. Problem No. 5: Scope of License Grants• If there are multiple providers, which provider needs a license from another to provide services to the common customer?• Avoid territorial limitations to allow use at DR site and/or by another entity• Advantages of contractual definition of “Use” 25 60639055
    26. 26. Problem No. 6: Software Escrow• Source escrow in cloud computing• Do you need software escrow?• If so, what goes in escrow? – Programmer’s names and contact info 26 60639055
    27. 27. Prediction about Contract Carbon Rights• Commercial agreements evolved from having no IP provisions to having IP provisions• Similarly, commercial agreements should expressly allocate carbon and water ownership rights (and the right to sell and trade them) 27 60639055
    28. 28. Questions and AnswersWilliam A. TanenbaumChair, Technology, Intellectual Property & Outsourcing GroupChair, GreenTech and Sustainability GroupKaye Scholer LLP, New York and Palo Altowtanenbaum@kayescholer.com212-836-7661 28 60639055
    29. 29. William A. Tanenbaumwtanenbaum@kayescholer.com• William A. Tanenbaum is the international chair of Kaye Scholer’s Technology, Intellectual Property & Outsourcing Group and its GreenTech and Sustainability Group. Chambers found that he “built one of New York City’s most outstanding transactional IT practices,” that he is a “well-respected attorney, with a well-informed approach [who] provides litigation, transaction work and strategic counseling on a range of technology issues,” that he is “efficient, solution-driven and makes excellent judgment calls,” and that he is an “internationally recognized intellectual property, technology and outsourcing lawyer”. He is recognized as a “Leading Individual” and was awarded “Recommended” ratings in both “Technology and IT Outsourcing” and “Business Process Outsourcing,” and named as a “Notable Practitioner” at the national level in Outsourcing. He was voted one of the world’s top 250 IP strategists (IAM client survey) and he was selected as one of the country’s top 25 pre-eminent IT practitioners in the Best of the Best USA. He regularly advises clients on strategic intellectual property concerns, privacy, data security, data transfer, information life cycle management and competitive intelligence matters, in both transactional and litigation contexts. 29 60639055
    30. 30. William A. Tanenbaum (cont’d)• Mr. Tanenbaum is the founder and co-chair of PLI’s annual Outsourcing Conference, the founder and chair of its Green Technology conference, and a regular lecturer at industry outsourcing conferences. He chairs Kaye Scholer’s GreenTech breakfast seminar series and presents a webcasts on IT, IP and GreenTech topics. He has contributed to Bloomberg’s Energy Sustainability Law Report. He is a past President of the International Technology Law Association (formerly the Computer Law Association) and is listed in Who’s Who in America, the International Who’s Who of Business Lawyers, the Guide to the World’s Leading Litigation Experts and the Guide to the World’s Leading Patent Law Experts. He is the privacy and data protection columnist for the New York Law Journal, co-author of a book on privacy law and has been quoted in The Economist magazine as an expert on IP law. His articles have been used at Harvard and other law schools. He graduated from Brown University (degree with highest honors and Phi Beta Kappa) and Cornell Law School. 30 60639055
    31. 31. Chicago . Frankfurt . London . Los Angeles . New York . Palo Alto . Shanghai . Washington DC . West Palm Beach Copyright ©2011 by Kaye Scholer LLP. All Rights Reserved. This publication is intended as a general guide only. It does not contain a general legal analysis or constitute an opinion of Kaye Scholer LLP or any member of the firm on legal issues described. It is recommended that readers not rely on this general guide in structuring individual transactions but that professional advice be sought in connection with individual transactions. References herein to “Kaye Scholer LLP & Affiliates,” “Kaye Scholer,” “Kaye Scholer LLP,” “the firm” and terms of similar import refer to Kaye Scholer LLP and its affiliates operating in various jurisdictions.

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