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Mercentile Law and Corporate Reporting Final
Mercentile Law and Corporate Reporting Final
Mercentile Law and Corporate Reporting Final
After raising $80 Million in its last Series F round of funding, Icertis- a SaaS-based AI-driven
platform for enterprises that deals in Contract Management are now planning to go public in
the coming few months.
But, in a recent board meeting, the CRO (Chief Risk Officer) of Icertis, raised some concerns
on the data security element of the platform, stating that there is a very high potential legal
risk involved in case the company is sued for having access to the client’s data from
backend or in case the data got leaked by an internal team member.
And as the meeting concluded, it was unanimously decided, that the IPO will be filed only
after the following matter has been taken care of.
As the Head of the legal team, you are supposed to come up with the relevant steps that can
be taken to mitigate or eliminate the legal risks involved in the above two cases i.e.:
a) Having the access to the client’s data from the backend since end-to-end encryption
is not available.
b) Potential of data being leaked from an internal employee of Icertis.
Please explain the elements involved in the relevant documents created in detail.
(80 Marks)
Answer:
Icertis, being a B2B SaaS based company and that too dealing on an enterprise level, the
element of “Data Security” is a major concern for every organization and there is a huge
potential risk involved for the data being leaked.
Although in every product demo it is verbally conveyed to the client, that Icertis “Does Not”
provides end-to-end encryption and hence the Backend team can have the access to the
data in case of any technical support requirement from the client, a mere verbal
communication is not enough and a proper Non-Disclosure Agreement needs to be
drafted, which constitutes the following elements:
Party Disclosing Information: “ABC Company Pvt Ltd” with a mailing address of
[abce@gmail.com] (“Disclosing Party”)
3. Obligations of Receiving Party. Receiving Party shall hold and maintain the Confidential
Information in strictest confidence for the sole and exclusive benefit of the Disclosing Party.
Receiving Party shall carefully restrict access to Confidential Information to employees,
contractors and third parties as is reasonably required and shall require those persons to sign
nondisclosure restrictions at least as protective as those in this Agreement. Receiving Party
shall not, without the prior written approval of Disclosing Party, use for Receiving Party's
benefit, publish, copy, or otherwise disclose to others, or permit the use by others for their
benefit or to the detriment of Disclosing Party, any Confidential Information. Receiving Party
shall return to Disclosing Party any and all records, notes, and other written, printed, or
tangible materials in its possession pertaining to Confidential Information immediately if
Disclosing Party requests it in writing.
4. Time Periods. The nondisclosure provisions of this Agreement shall survive the
termination of this Agreement and Receiving Party's duty to hold Confidential Information in
confidence shall remain in effect until the Confidential Information no longer qualifies as a
trade secret or until Disclosing Party sends Receiving Party written notice releasing Receiving
Party from this Agreement, whichever occurs first.
6. Severability. If a court finds any provision of this Agreement invalid or unenforceable, the
remainder of this Agreement shall be interpreted so as best to affect the intent of the parties.
7. Integration. This Agreement expresses the complete understanding of the parties with
respect to the subject matter and supersedes all prior proposals, agreements, representations,
and understandings. This Agreement may not be amended except in writing signed by both
parties.
8. Waiver. The failure to exercise any right provided in this Agreement shall not be a waiver
of prior or subsequent rights.
9. Notice of Immunity. Employee is provided notice that an individual shall not be held
criminally or civilly liable under any federal or state trade secret law for the disclosure of a
trade secret that is made (i) in confidence to a federal, state, or local government official, either
directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or
investigating a suspected violation of law; or is made in a complaint or other document filed in
a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit
for retaliation by an employer for reporting a suspected violation of law may disclose the trade
secret to the attorney of the individual and use the trade secret information in the court
proceeding, if the individual (i) files any document containing the trade secret under seal; and
(ii) does not disclose the trade secret, except pursuant to court order.
Hence Pt.2 (e) states the exemption of access to the information of the disclosing party, which
eliminates the risk of being sued for the same.
(B) Potential of data being leaked from an internal team member of Icertis:
In order to mitigate the risk of data being leaked from an internal employee of Icertis, all the
employees whose role and responsibility gives them a direct access to the client’s data,
needs to sign an agreement with the following elements and for all the new employees the
section of “Ownerships of Intellectual Property Rights” need to be modified as per the
below mentioned points:
1. Transfer of Employee IP: For good and valuable consideration including the
entering into of this Agreement by the Company, the Employee hereby transfers and
assigns all his right, title and interest in and to any and all source code, compiled
code, documentation, notes, drawings, flow charts, work records, plans, planning
tools, summaries, presentations and other works created by him during the Term
(any and all of which are referred to herein as “Employee’s Developments”) and with
respect to the Business.
2. Confidential Information: The Employee acknowledges that in the course of his
employment with the Company he will acquire information about the Business and
the affairs of the Company, some of which will include commercially valuable trade
secrets, intellectual property and other confidential or proprietary information (all
referred to herein as “Confidential Information”), including without limitation financial,
sales and marketing information, processes, techniques, know how, systems,
methods, data, inventions, devices, ideas, formulae and improvements, and
enhancements and modifications thereto and derivatives thereof, whether patented
or not.
4. Exception: Section 3 shall not apply to particular material which the Employee can
show with reasonable proof was:
a) already known to the Employee before it was disclosed to the Employee by the
Company.
b) lawfully disclosed to the Employee on a non-confidential basis from a third party
that is entitled to disclose it on a non-confidential basis; or
c) generally available to the public at the time of the Employee’s exposure to same
without any breach of an obligation of confidentiality.
d) given access by the client via verbal or written conformation for a technical
support
Therefore, by the inculcation of a Non-Disclosure Agreement with the clients and the
Ownership of Intellectual Property Rights in the employee agreement for employees having
direct access to the customers information will mitigate/eliminate the possibilities of a legal
obligation.