Baseline Partnership Announced

As others have been, I’m very interested in technologies which can improve the lives of contract negotiators, purchasing managers and other folks engaged in the process of contract review. Dozens of software packages have been released in the last few years which purport to help ease that process. I’ve played with many of them – most end up being focused on document assembly. What I’ve been looking for is a tool that helps when I’ve got a non-standard agreement and want to quickly compare it to my standard preferred language.

This is usually a highly choreographed event. I start with needing a 22″ monitor so I can see two documents side-by-side at 100%+ size (my eyes are getting old). Then, with the proposed agreement on the left and my template language on the right, I systematically move through the proposed agreement and bounce around my template to find the matching sections. I read the proposed language, consider its phrasing, see what can be kept and how I can make my preferred language work without appearing to bloody up the proposed agreement too badly. I redline the proposed agreement accordingly and then turn it back around to the other side. Depending on the length of the agreement, font size and other issues, I typically move at a pace of about 4-8 pages per hour for the complete process.

When I first heard about Baseline, I was skeptical. Baseline Solutions advertises it as a document review and knowledge management tool. You upload your preferred language (the baseline information) and then you can bounce any other proposed agreement off your preferences. The software uses proprietary algorithms to review the wording and match the sections. It looks for common phrasing but also appears to recognize intent. Frankly, I’m not sure how it works, but it does.

After a few seconds, the system returns to me a Word document with track changes turned on showing changes to the document corresponding to my preferred language. The result is that the first review of my prior two-documents-on-the-screen-at-the-same-time exercise is accomplished in a few seconds. The basic review is complete – now I can spend my valuable time reviewing the unique contract issues. I’ve just saved time and produced a better document.

In the first iteration, Baseline was focused exclusively on NDAs, as they’re seen to be the most static of standard agreements. But the newly released Baseline product tackles software licenses and services agreements as well. Added into the product now are two new features, both of which Licensinghandbook is proud to participate. Several sections of the Software Licensing Handbook are available as a Knowledgebase within Baseline. This is like Pop-Up Video for your contract. See a section you’ve never heard of or don’t know why it’s there? The Knowledgebase is there to explain.

Over the years, many folks have asked for my template software license agreement. I’m reluctant to hand it out – it’s not only the product of a decade of refinement, but it’s also detailed enough that failure to use it properly could result in problems. Baseline uses template language as the reference point for comparison, so in a first for Licensinghandbook, I have agreed to allow Baseline to use my template software license language as a template against which customers can bounce their proposed agreements.

Please join me in welcoming Baseline Solutions to the contract management marketplace!

[Disclaimer: My partnership with Baseline provides me revenue based on the use of the Software Licensing Handbook Knowledgebase or the Licensinghandbook Software License Agreement.]

Software Licensing Handbook Reviewed by H. Ward Classen

I am honored to present a review of the Software Licensing Handbook by H. Ward Classen, author of A Practical Guide to Software Licensing for Licensees and Licensors.  Thanks to Ward for his time and energy on creating such a comprehensive evaluation!

Jeffrey Gordon’s Software Licensing Handbook is one of those rare reference resources where the reader only wishes they had come across it earlier.  The Software Licensing Handbook is a comprehensive resource addressing all of the material potential issues a practitioner may confront in a software licensing transaction.  It guides the reader from preparing for the RFP/RFI process to identify prospective vendors until the successful vendor has completed its contractual obligations.

The book begins with a detailed overview of the different intellectual property rights utilized to protect software: patents, copyrights, trademarks and trade secrets.  Mr. Gordon’s explanation allows the reader to understand the basis and means for software protection and thus the foundation for software licensing itself.  By providing a succinct overview of intellectual property law, he permits the reader to conceptualize reason for and the importance of each clause in a software license.  The subsequent text delves into a comprehensive explanation of almost every issue that may arise during the course a software negotiation, including defining the services to be rendered, tax liability, indemnification, source code escrow and most importantly, how to successfully negotiate a software license.  Perhaps the most valuable aspect of his book is Mr. Gordon’s advice on how to negotiate a software license.  Mr. Gordon is an expert in negotiation and it clearly shows.  He interspaces throughout the book negotiating positions from both the licensor’s and licensee’s perspective. His tried and true advice provides invaluable insights that benefit all parties to a transaction.

Mr. Gordon also examines many of the issues related to alternative licensing transactions such as ASP licenses and click-through and shrink-wrap licenses as well as open source licenses.  As open source software assumes greater importance in the world of software licensing, it is imperative that both licensors and licensees understand the risks and benefits of utilizing open source software   Too often parties fail to realize the inherent risks of utilizing viral licenses. This brief but comprehensive discussion provides the reader a fundamental working knowledge of the relevant issues related to open source licenses.

The book explores many aspects of software licensing that are rarely addressed in other books including the RFP process, software audits and the importance of establishing severity levels for maintenance and support agreements.  Each of these issues is critical to a successful licensing transaction but yet many practitioners fail to grasp their importance.  By utilizing an RFP process, a customer is able to compare and contrast the abilities of several vendors and usually obtain better terms and pricing through a competitive process.  Software audits allow the licensor to confirm the licensee’s compliance with the terms of the license grant.  Audit language must be carefully drafted to protect the licensor’s interests while limiting the licensor’s ability to conduct overly broad audits of the licensee’s business at the licensee’s expense.   Similarly, it is in both parties interests to negotiate well defined severity levels for the provision of support and maintenance services to avoid potential disputes.

Not only does Mr. Gordon address the issues involved in software licensing, he provides the reader with a solid foundation for negotiating peripheral agreements when purchasing computer hardware and working with value added resellers (VARs).  While some readers will not interact with VARs or purchase hardware on a day to day basis, his discussion is not superfluous as every practitioner should have an understanding of the interrelationship among vendors providing an integrated software system to ensure the customer receives a vibrant, fully functional system.

Mr. Gordon also includes a chapter on contract management.  Many practitioners falsely believe the contract ends with the acceptance of the software.  This misconception often contributes to the software failing to meet the licensee’s long term goals.  Many software projects continue for many years after the software’s initial installation, emphasizing the need for both the licensor and licensee to manage the contracting process well after installation and acceptance.  Mr. Gordon’s eloquent discussion also incorporates the importance of managing the deliverables, service levels and guiding the contract toward completion.  Finally, the Software Licensing Handbook contains an excellent glossary of important words and phrases often found in software licenses as well as a list of resources the reader can access for further information.  These features are often overlooked by many other authors but yet they provide invaluable assistance to the reader.

Perhaps the book’s only weakness is its lack of a comprehensive model software license form to illustrate Mr. Gordon’s excellent discussion.  A model form would reinforce the reader’s understanding of Mr. Gordon’s points and help them visualize the issue being discussed.  Given the large number of forms available in form books and over the internet, this is not a material flaw but one that would serve as a welcome addition for the reader.

In short, the Software Licensing Handbook is a valuable resource that every individual who negotiates software licenses and technology agreements should own.

Book Usage

I’ve received a few questions regarding the content of this book and how it should be used. Truthfully, the material is very technical (from a language perspective). That’s just the nature of the contract beast. Even those of us who do this day in and day out find it tedious at times. Understanding the nuances of the various sections, however, is what makes this skill so valuable and interesting!

So no, I do not intend for you to read this book straight through. Use it as a companion reference when you have a contract that you need to read and review. Check section against section. Compare language, style, needs, wants.

But for heaven sake, don’t read it all the way through.

Unless you’re suffering from insomnia. Then by all means, enjoy!