information that shouldn’t have
been part of the data, or failure to obtain proper
authorization to include third party data. In some
contracts, the parties seek mutual indemnities.
All these clauses raise complex isstres. In particu»
lar, who defends whom regarding an alleged data
breach either party could have caused? If you do
include data breach indemnities, think through
what will happen when a suit gets filed, as well
as how overbroad terms might force a party to
defend a case triggered by the other’s mistakes.g
. Liquidated Damages: Misuse of big data is
an excellent candidate for liquidated damages
because it can be so hard to determine the
injured party's damages.
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Termination
35. Return ofData in General: Usually, the recipient
returns the data when the contract terminates.
Licensors should consider terms governing the
timing of returni'Kr/ithin _ hours [or business
days] of termination of this Agreement"~as well
as the format of returned data. Most likely, the
terms governing the format for original delivery,
addressed in number 2 supra, will do the trick.
But if the recipient will be r'etuming derived
data or derivative works, formatting needs may
change.
Transfer/Return of Modified Data: Parties that
don't own derived data or modified data, or
receive a permanent license, generally will be
required to deliver it upon contract termination.
"Within _ business days of termination of this
Agreement, Vendor shall deliver to Customer all
Derived Data and derivative works of the Data
in its possession or control as of the moment of
termination." Rettrm of data should be subject
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to the same sort of terms as the original delivery.
discussed in number 2 supra.
37. Destruction of Data: If the recipient won't be
keeping data, the contract should in most cases
require its total destruction. “Within _ busi-
ness days of Licensor’s written acceptance of the
returned Data, Recipient will destroy any and all
copies of the Data on its computer or otherwise
in its possession or control, exercising reasonable
efforts to ensure that no element of the Data may
be restored by any means.”
38. Transition Services and Storage: In many cases,
the customer won’t be able to manage or even
store its data until it's found another vendor
or invested in staff and systems. So if termina-
tion without sufficient notice is even possible,
the licensor should consider transition terms.
The contract might require, for instance, that the
recipient continue to store the data and give the
licensor access for some period of months, for a
fee. of course, many cloud services agreements
provide for complete trant lion services after
termination, where the vendor continues to pro-
vide the core service. (You could also use a long
notice period for termination, but a transition
system often works better because it preserves
only specified obligations, terminating the rest
of the contract. Plus, it’s hard to eliminate the
risk of termination with a short notice period, for
breach.)
Miscellaneous
39. Compliance Audit: In some cases, the recipient’s
restrictions won't do the licensor much good
without the right to checkito audit the recipi-
ent’s compliance with the terms. (This s separate
from the data security audit discussed in num-
ber 26 supra.) "No more than once per calendar
year, Licensor may audit Recipient’s computers,
books, and records relevant to compliance with
the provisions of Sections _ (Data License), _
(Restrictions on Data Use), and _ (Payment).
Such audit will be condtrcted at Recipient's
premises at such time as the parties may agree,
provided each will negotiate in good faith regard-
ing timing, and the audit shall not unreasonably
interfere with Recipient's operations. Recipient
may require that any information disclosed or
revealed through an audit be subject to such rea-
sonable nondisclosure agreement as Recipient
provides. In the event that an audit reveals
material noncompliance with the terms of this
Agreement, Recipient shall reimburse Licensor