An Administrator's Guide to California Private School Law

Chapter 20 - Intellectual Property

 Vendor Marketing . Schools should consider the extent to which the vendor should be allowed to market and use the school’s name. The contract should clearly state the extent that the vendor may use the school’s name. A school may want to insert a contract provision stating that the vendor must obtain prior approval from the school before using the school’s name for marketing purposes.  Indemnification . Vendors will likely want the school to indemnify them for any breach of copyright claims made against the vendor. The school should carefully consider the language of the indemnification provision and decide whether it would be appropriate under the circumstances. Vendors often present overbroad indemnification language to a school that could increase potential legal exposure to the school.  Reverse Engineering Clauses . Reverse engineering is the process by which a product is deconstructed to reveal its designs or to extract knowledge. Schools are most likely to encounter reverse engineering clauses in contracts with software vendors that want to prevent clients from deconstructing their software to create a similar product. A reverse engineering clause is a limitation on the school’s license. These provisions will likely prohibit the school from altering, disassembling, or reverse engineering the software. As a result, schools should carefully review the language of the reverse engineering clause to make sure it is not overbroad.  Residual Knowledge Clauses . Residual knowledge is information that a party to the contract retains through memory long after the project or business deal is complete. To put it another way the vendor may learn confidential information through the process of working with the school. The vendor may want to use basic concepts they learned while working with the school’s information to make general improvements or developments to their own work. As a result, vendors may propose a residual knowledge clause to ensure they will be able to provide similar services to other clients even though they were exposed to the school’s confidential information.

Schools should not allow residual knowledge clauses unless they are very limited in scope. Schools should examine residual knowledge provisions very carefully to ensure there is no violation of student or employee right to confidentiality and to ensure no implied rights are created. The school should prohibit the communication or preservation of confidential information and define specific information that should be protected. Schools may also want to consider including a provision that prohibits vendor employees that work frequently with the school from working on the account of a competitor. Residual knowledge clauses are favored by the party who is the recipient of confidential information. In some circumstances, the school may choose to utilize a residual knowledge clause to allow the school to provide services for itself with information it learned while using the vendor’s confidential information. However, more often than not, residual knowledge clauses will be proposed to benefit the vendor.

An Administrator’s Guide to California Private School Law ©2019 Liebert Cassidy Whitmore 619