This year I thought I would add a second skills-based course in drafting license agreements. Fortunately, there are a number of good casebooks that have appeared over the last couple of years that focus on licensing law. I thought that using one of those texts, supplemented by some of the licensing materials from my multimedia law treatise, would provide a good foundation for the course. Like my previous course, I thought I could create a series of exercises that could teach students how to draft contract clauses for various licensing situations. However, unlike my prior course, where everyone seemed to be working in the same direction from Day 1, I have found the licensing law class to be a much greater challenge.

Why? Because many of the students have worked at law firms and in legal departments of various entertainment industry companies, either as summer clerks or as externs, and have been exposed to licensing agreement actually used in their particular industry – all of which are radically different from license agreements used in other industries. The result is that perhaps a third of the class thinks they know what a license agreement looks like, and are shocked, and often offended, when I tell them that the license clauses they are drafting are not acceptable.

The problem is that every sub-industry within the entertainment field has their own unique way of writing license agreements, and the clauses used have been honed for very specific types of transactions. While the technology industry generally has a style of contract drafting that does not differ significantly with the subject matter – patent license for semiconductors look a lot like patent license for biotech (with some obvious differences in terminology), license agreements in the music industry may look very different depending on whether you are working for a composer, music publisher, record company, recording artist, etc. And that’s just the music industry. The same Tower of Babel exists in the movie industry, television industry, sports industry, etc.

What I have found is that I must ask the students to look beyond the very specific clauses unique to a particular player in a particular entertainment field, and try to see those aspects of licensing that are common to all (or at least most) of the IP fields. That’s turned out to be easier said than done. I need to constantly talk about the important underpinnings of licensing law in general, and how those general principles are then “customized” for each industry. I have to tell the students to see beyond the industry they have some (generally fairly superficial) familiarity with, and understand what sets licenses apart from other forms of agreements.

We are just entering Week 4 of the class, and I think I have around 80% of the students on board to that broader way of thinking about licensing. Unfortunately, that still leaves about 20% of the students thinking that the way they learned to write licenses in their first and only “job” in the field is the only way to write such contracts. The positive results of this ongoing debate is that it gives me a lot of examples to use in class to highlight the fact that licenses are very malleable things that can be modified to meet the needs of a particular industry or sub-industry, but that underlying those differences are certain principles that are (almost) universal in application.

Fortunately, in a couple of weeks the materials we have been covering that focus on the general principles of licensing, will give way to more industry-specific contracts. That will give the students an opportunity to draft clauses that are more particular to specific areas of entertainment law – music, motion pictures, professional sports, etc. I am hoping that this will solve some of the problems I have faced thus far. I’ll let you know.

The first ten years of my practice saw a need to learn copyright law, while the second ten years required a working knowledge of patent and trademark law, and some privacy law, with a little international trade law thrown in for good measure (including U.S. export control laws and regulations). It was also the time when state and federal legislators were beginning to craft a specialized field of computer crime laws.

By the late 1980s there was a convergence of sorts between the computer and entertainment industries, primarily through videogames and CD-ROM titles. As a result, computer lawyers needed to learn about how the entertainment industry worked – again, primarily in the contracting area — but also with regard to trademarks, Hollywood guilds and unions (e.g., SAG, DGA) and right of publicity issues. It also required computer lawyers to learn a lot more about copyright and contract law in areas that had previously been limited to entertainment lawyers.

Since the 1990s we have seen the subject matter of computer law expand rapidly. We have had to learn telecommunications law, expand our knowledge of trademark law to deal with domain name issues, cope with the ever-expanding body of federal and state laws that deal with the financial laws and regulations underpinning e-commerce, privacy issues, cybercrimes, and a host of other fields that computer lawyers (now called IT lawyers) never thought they would need to deal with.

Now, cloud computing may require us to learn another body of law – admiralty law. Google has recently filed patent applications for ocean-going data centers that would be housed on large merchant ships and could be moored off-shore or sail blissfully in international waters – avoiding the problems arising from pesky local or national laws. These ships would generate their own power, provide their own cooling, have Internet connectivity (presumably from satellites or undersea cables) and generally be subject to no country’s laws. But underlying this concept is still the fact that we are dealing with ships. And ships are subject to both national and international laws – namely admiralty laws.

Dang. Just when I thought I was done learning new laws, I now find myself having to delve into the esoteric area of admiralty law. Ships containing data centers are no different than, and are subject to the same laws as, any other ship. Thus, they are subject to such things as piracy, salvage and seizure (arrest). Yet their cargoes may be infinitely more valuable than any previous ship that has ever plied international waters – the data of thousands or tens of thousands of corporations, millions of individuals, and numerous governments from around the world. How much would that cargo be worth if it fell into the hands of Somali pirates? And what if the assets of even one customer (or the ship owner itself) were subject to a seizure (arrest) order, and the entire ship was seized and the computers taken off the grid?

Far fetched? It was only a couple of months ago that the FBI, looking for assets of a company that had allegedly defraud the local telephone company, raided and seized all of the servers in several Dallas-based data centers – putting all of the data centers’ customers, not just the target of the seizure, out of business. Now multiply that by thousands of customers whose access to their data could be lost if the ship on which their servers and data are housed is arrested under existing admiralty law.

So to all of you IT lawyers representing clients that have or will be entering into cloud computing “solutions” to their data processing needs – start boning up on your admiralty law. It looks like you’re going to need it.

The four courses being offered and the instructors are:

Comparative Electronic Commerce Law and Regulations
Instructor: Dr. Julia Hornle, Queen Mary College of Law, University of London

Comparative Information Privacy Law and Regulations
Professor Ian Walden, Queen Mary College of Law, University of London

Drafting Information Technology Agreements
Professor Michael D. Scott, Southwestern Law School (me)

International Cybercrimes
Professor Susan Brenner, University of Dayton School of Law

The program will run June 21, 2009-July 24, 2009 and is open to any law student from an ABA-accredited law school in the United States, Canadian law students and other law students who can demonstrate English language proficiency. The brochure is available here.

If you are a law student, a law professor, or someone who knows a law student who might be interested in the program, please let them know about it. Due to limited classroom space, the program is limited to 48 students. Students will be admitted to the program on a rolling basis starting in January 2009, so early application is essential. The application is available here.

According to the facts, Rogers Communications, Inc., a Canadian cable company, entered into an agreement with Aliant, Inc. to string Rogers’ cable lines on telephone poles for an annual fee of $9.60 per year. Rogers intended to have a contract with a minimum five year term at a fixed rate with five year renewals. The renewal periods were to be subject to a one-year notice of cancellation.

The contract language said that the agreement “shall continue in force for a period of five years from the date it is made, and thereafter for successive five year terms, unless and until terminated by one year prior notice in writing by either party.”

Aliant gave notice of termination during the first five year period. Rogers objected and the parties ended up before the Canadian Radio-television and Telecommunications Commission (CRTC). Aliant, armed with a book on proper English grammar, argued that the second comma made the termination provision applicable to both the initial and the subsequent renewal terms, not just the renewal terms. The CRTC agreed. “Based on the rules of punctuation,” the comma in question “allows for the termination of the [contract] at any time, without cause, upon one-year’s written notice.”

Aliant has proposed a rate increase from $9.80 per pole per year to $28.05 per pole per year, costing Rogers more than $2.13 million more than expected.

Should the regulators have relied on an English grammar book to find the meaning to be unambiguous, or should they have looked behind the contract at the intent of the parties? Should parol evidence have been admitted to show the intent of the parties?

One contract drafting expert had this to say on the issue:

“The CRTC’s analysis seems pedantic, in that it would be unreasonable to assume that drafters grasp the implications of every comma. But as a way of resolving a dispute, consulting a few books on punctuation is certainly quicker than delving into the intent of the parties. * * *

“The drafter would have been better off rewriting the provision. Here’s my version: ‘The initial term of this agreement ends at midnight at the beginning of the fifth anniversary of the date of this agreement. The initial term (including any extensions in accordance with this section 12) will automatically be extended by consecutive five-year terms unless no later than one year before the beginning of any such extension either party notifies the other in writing that it does not wish to extend this agreement.’”

And the questions on any transactional attorney’s mind — Does the careless use of a comma constitute malpractice? And will the law firm that represented Rogers in this contract negotiation be representing Rogers again in the future?

A consistent litany is that law students do not know how to write. Unfortunately, colleges are moving away from having students write lots of essays — it takes too much time to grade them. Instead, schools are moving more toward short-answer and multiple choice exams, even in English courses. My son graduated from a very good university only a few years ago with a degree in English and even he lamented that there were so few classes in which he was asked to write a paper.

If students don’t learn how to write in college, should it be up to law schools to teach them how to write? And if not law schools, should it be up to law firms to teach them how to write?

The dearth of writing opportunities (other than final exams) in law schools is leading many schools to include drafting courses in their curriculum. The course I teach, for example, requires both in-class and take-home writing assignments each week. It is a pain in the neck to grade all of those assignments, but it is satisfying to see most of the students improving their writing throughout the course. By the time they get to their last writing project, they are comfortable writing contract clauses, and most of them do an extremely credible job in drafting a full agreement. Indeed, the work they do is often better than what I saw coming from young associates when I was in private practice.

But, of course, a single, three hour class over 14-weeks is not going to solve the writing problems facing law firms. And it is not going to prevent the problem presented in the Rogers case from arising again in a different context.

The fact is, lawyers are pretty good writers in general, but are not grammatical experts. It is unreasonable to a court or government agency to focus on an issue of punctuation that probably only a few lawyers would even realize is a problem.

Where there are two possible interpretations of a contract clause, no matter what some expert grammatician says, the trier of fact should look behind the text to determine the party’s intent. That is the only way to do justice.

There were no casebooks available, nor any good books of any kind. So, the first thing was to prepare materials. Surprisingly, except for a few clauses that seem to be heavily litigated — warranty disclaimers, choice of laws, etc. — most clauses you are likely to find in a technology agreement have never been analyzed in any reported court decisions — either at the state or federal level. So the materials consisted mainly of selected provisions of the UCC, Restatement, state laws, the few court decisions that were available, and a number of articles that look at various boilerplate provisions. I supplemented those materials with excerpts from my book — Scott on Computer Law – which has several chapters devoted to contract clauses. That gave a good core of materials to teach from.

The second issue was how to teach a contract drafting course to students who had never read a contract, let alone drafted one. I decided to approach it like one would a foreign language — start with lessons on the “vocabulary” of contracts and some simple “grammars,” gradually introducing the students to more complex structures and eventually complete agreements. So we started with simple boilerplate clauses; ripped them apart and rebuilt them. We looked at multiple versions of the same clause and discussed the relative strengths and weaknesses of each version from the perspective of each of the parties to the transaction.

In each class, we had an in-class assignment, which consisted initially of having the students draft one or two boilerplate clauses based upon the facts of a short hypothetical. The facts prevented the student from just using an off-the-shelf clause. Their take-home assignments were to draft short agreements or sections of longer agreements (e.g., a non-disclosure agreement, a work-made-for-hire section of a software development agreement). Again, the writing assignment was based on a hypothetical fact situation, which prevented them from simply cribbing a form clause and not modifying it to fit the facts.

After 3-4 weeks, the students were ready to start drafting short contracts. In the meantime, the in-class discussions had moved from individual clauses to specific types of contracts. We dissected and analyzed a variety of common agreements, including licenses, development agreements, distribution agreements, employment agreements, web site terms of use, privacy policies, outsourcing agreement and website hosting agreements. We explored how the same or similar clauses showed up in virtually every agreement, and when the clauses were different, why there were different. We discussed the goal-oriented approach versus the confrontational approach to contract drafting, how contracts often create long-term relationships like marriages that need to allow for problems and disagreements along the way with dispute resolution mechanisms to avoid litigation.

We had two guest speakers along the way — one lawyer and one experienced business consultant — who provided valuable, real-world insights on the contract drafting process and how lawyers and clients can best work together to achieve businesses’ goals through that process.

Their final project was to draft and negotiate the terms of a computer systems acquisition agreement. The class was divided into “law firm” teams. Half the teams represented the vendor, while the other half represented the customer. Each law firm was provided basic information on the types of computer system being acquired plus several “internal memos” from their “client” telling them specific requirements, needs, concerns, of their client. Each team then had an opportunity to have a live presentation from their “client” and a Q&A session with the client. Then, each law firm prepared a Term Sheet and turned that Term Sheet into a full draft agreement. Each law firm then received a copy of an agreement drafted by a law firm for the other party and were given a week to compare their agreement with the other firm’s agreement and make a list of crucial changes that needed to be negotiated.

Each pair of law firms then had a three-hour negotiating session to see how many of the disputed terms could be agreed upon. The last assignment was to redline their draft agreements with the agreed-upon changes, and prepare a memo on the unresolved provisions and why the parties were unable to resolve them.

In a very short period of time, all of the students were able to turn out contract clauses, sections of contracts, and eventually entire agreements that were better than many I had seen drafted by “experienced” transactional lawyers. The students felt that they had not only learned a great deal about contract law and the contracting process, but that they had gained the confidence necessary to draft even the most complex documents by breaking them down into manageable clauses and groups of sections and then building those sections into a complete agreement. Every student felt that the hard work had been well worth it, and all of them said that they would recommend the course to their colleagues. A few said that this was the most useful course they had taken in law school.

So . . . if you are looking for a good law clerk or associate with contracting drafting experience, let me know.