Designing and Deploying Corporate DRPs in the Technology Space

Reginald A. Holmes, Esq.THE HOLMES LAW FIRM, APCLos Angeles and Chicago

Merriann M. Panarella, Esq.Panarella Dispute Resolution ServicesBoston and New York

Neil Currie, Esq.Vice President, American Arbitration AssociationLos Angeles

Welcome

Designing and Deploying Corporate DRPs in the Technology Space

Risk Management, Litigation Cost Reduction, Disruption Containment

Designing and Deploying Corporate DRPs in the Technology Space

Topical Perspective

• Why are DRPs Important?

• Employment Disputes are Inevitable• Management of Disputes is Key• Here are Just a Few Benefits of DRPs…

• Why DRPs Should be in Every Technology Counsel’s Toolbox

Designing and Deploying Corporate DRPs in the Technology Space

The Typically Designed and Deployed DRP

• What is a DRP?• Designing a Typical DRP• Deploying a Typical DRP• DRP Use in the Technology

Space

Designing and Deploying Corporate DRPs in the Technology Space

Effectiveness and Utilization Rates of DRPs

• How Cutting Edge Companies are Using DRPS• Cost Savings• Disruption Containment• Tech Companies Also Benefit

Designing and Deploying Corporate DRPs in the Technology Space

Due Process Considerations

• Public Interest• Individual Interests• Corporate Concerns• Legislative Interests• Judicial Concerns

Designing and Deploying Corporate DRPs in the Technology Space

Pros and Cons of DRPs in the Corporate Technology Space

• General Views• Deeper Perspectives• Current Examples

Designing and Deploying Corporate DRPs in the Technology Space

Slide 1The Tweet Storm Apocalypse

Designing and Deploying Corporate DRPs in the Technology Space

The Company and Prime Players

David Darkfellow Jamal Jasper

Designing and Deploying Corporate DRPs in the Technology Space

The Employment Handbook and DRP

The HandBook

The DRP• Step 1-Internal Resolution

• Step 2-Mediation• Step 3-Arbitration

Designing and Deploying Corporate DRPs in the Technology Space

Jamal’s AI Breakthrough

Designing and Deploying Corporate DRPs in the Technology Space

The Confrontation

Designing and Deploying Corporate DRPs in the Technology Space

Just a Few Issues….

Tech Hero or… Thief!

Designing and Deploying Corporate DRPs in the Technology Space

DR Continuum

Designing and Deploying Corporate DRPs in the Technology Space

The DRP-Part 1Escalation, Internal Efforts at Resolution

• Problem and Objectives• Strategies

• Practice• Damage Control

• Employee Complaint• Supervisory Role• HR Role• Legal Department Role• Resolution Forum

Designing and Deploying Corporate DRPs in the Technology Space

Slide 1The Tweet Storm Apocalypse

Escalation, Internal Efforts at Resolution

Designing and Deploying Corporate DRPs in the Technology Space

DR Continuum

Designing and Deploying Corporate DRPs in the Technology Space

The DRP-Part 2Mediation

What Does the DRP Say About Mediation?

• Information-Who needs what?• Does it Address Timing

• What if Mediation Fails?

• Outside/Inside Counsel?• Selection of Mediator?

• What IP Matters are Carved Out?• Does it Specify an Administrative Institution?

Designing and Deploying Corporate DRPs in the Technology Space

Slide 1The Tweet Storm Apocalypse

Mediation

Designing and Deploying Corporate DRPs in the Technology Space

DR Continuum

Designing and Deploying Corporate DRPs in the Technology Space

The DRP-Part 3Arbitration in the DRP Process

• Special Considerations of Arbitration in the DRP Process• Arbitration’s Benefits and Challenges• What Does Arbitration Look Like Here?

• Timing• Arbitrator Selection• Confidentiality• Interim Measures• Support of the Court

Designing and Deploying Corporate DRPs in the Technology Space

Slide 1The Tweet Storm Apocalypse

Arbitration

Designing and Deploying Corporate DRPs in the Technology Space

The Benefits of DRPs in the Corporate Technology Space

• Improve Employee Relationships• Increase Employee Confidence and Morale• Develop a Culture for Dispute Resolution• Manage Risk Effectively and Efficiently• Reduce Litigation Costs• Contain Disruption Due to Disputes• Increase Protection for Corporate I/P

Questions?

Designing and Deploying Corporate DRPs in the Technology Space

Final Thoughts

Designing and Deploying Corporate DRPs in the Technology Space

THANK YOU!

2017 MCCA Global Tec Forum

The Intercontinental Hotel, San Francisco, California

Monday, 6/19/17 2:15 - 3:30 pm

Panel Session:“Designing and Deploying

Corporate Dispute Resolution Programs (DRP)In the Technology Space”

Risk Management - Litigation Cost Reduction - Disruption Containment

SpeakersReginald A. Holmes, The Holmes Law firm, APC (Los Angeles)

Merriann M. Panarella, Panarella Dispute Resolution Services (Boston) Neil Currie, Vice President, American Arbitration Association

Hypothetical – The Tweet Storm Apocalypse

The Company and Prime Players

TweetBook Inc. (“TB”) is a Redwood City, California based 3-year-old, publicly traded, 9 billion dollar high technology company that provides unique tweet compilation and distribution services. It has 1.5 billion unique users. TB became a publicly traded company on June 1, 2014.

The idea for the company came from 2 tweet happy friends, stock broker and

recently graduated Stanford MBA, David Darkfellow (“DD”) and Jamal Jaspers (“JJ”), a software engineering graduate student at UC Berkeley. In the Fall of 2012, while engaging in a multi-layered heated tweet battle between themselves and others regarding the relative merits and prospects of their favorite football teams, the San Francisco 49ers and the Oakland Raiders, Jamal exclaimed: “Man wouldn’t be nice if we could program our tweet account to respond to these knuckle-headed tweets while we just sit back and watch the football game”. David froze and rubbing his chin said; “hmm, yeah, yeah yes it would. He thinks for a while and then says: Jamal, that’s a great idea, how ‘bout we …” and off they ran with the

idea. Today, DD is the billionaire CEO and Chairman of TweetBook and holds

30% of its publicly traded shares. He is an active donor in conservative political circles and is involved in many high profile real estate development deals in major metropolitan areas around the country. DD is on the road always looking for the next real estate deal. JJ is the CDO (Chief Development Officer) and a 10% owner of TweetBook. As CDO, JJ handpicked the engineers in his lab and has hired the best of the best from his Berkley days. JJ’s lab contains some of the brightest minds in Silicon Valley. They are dedicated to him, and like kids, they are always vying for JJ’s attention and trying to impress him with their engineering feats. JJ is dedicated to the science; he is well off but lives a low profile life with his wife, Kisha Kingsley (“KK”) and family in the Berkeley Hills and is involved in many prominent progressive causes in the bay area.

TweetBook’s signature product is “TweetStorm”. The TweetStorm

application allows users to simultaneously and rapidly track and analyze multiple tweet streams and easily and quickly retweet “TweetPacks” to their followers in accordance with their inputted system preferences. TweetBook aggressively protects its IP through a rigorous strategically calculated program that includes the use of patents, trade secrets, trademarks and copyrights. It also requests its employees to sign NDAs and employment agreements whereby its employees agree that all work product that they produce which is connected to the business of the company is the IP of TweetBook. TweetBook’s employees also agree to be bound by TweetBook’s DRP plan.The DRP The DRP is referenced, but not included, in TweetBook’s employee handbook that each employee is given a copy of and has to sign as a condition of their employment with TB. The relevant part the handbook language states that:

“each TweetBook employee agrees to be bound by the Dispute Resolution Program of the company ( as revised from time to time). The DRP will be the exclusive means of resolving any and all disputes and conflicts between the company and the employee. A current copy of the applicable DRP may be obtained upon request from the company’s human resources department.”

On June 1, 2015, CEO DD announced that the employee handbook would hence forth be binding on all current and future employees as a condition of their continued employment with the company whether signed or not.

TweetBook’s DRP contains a four step process for the resolution of disputes and problems an employee may have.

Step - 1 involves the employee attempting to resolve the dispute at the supervisory level at face to face meetings;Step 2 - If the dispute cannot be resolved at Step 2, an employee may request that a mediation process be initiated to resolve the dispute; andStep 3 - If mediation does not resolve the dispute, then the employee may initiate an arbitration proceeding for the full and final resolution of the dispute.

The Problems JJ and DD are no longer close friends. DD is off doing his real estate deals and living the life. JJ is bored; he feels that TB is no longer cutting edge. JJ wishes to create a more revolutionary product, one incorporating artificial intelligence (“AI”) and he spends time in the evenings working on several visionary concepts for tweeting. JJ presents these AI-based visionary ideas to DD who flatly refuses to finance the effort. DD tells JJ: “if you want to do something with AI, do it on your own - you can’t do it here.” After the conversation with DD, JJ, a brilliant inventor and software designer decides to spend less time in TB’s offices and more time at his family’s vacation family home in Stateline, Nevada developing a new form of software based on AI. He works on the software only at his vacation place and only on the weekends and on his days off. On a long weekend, JJ’s engineers, Aleemal Ali (“AA”), Barack Babak (“BB”) and Celia Chan (“CC”) show up at his vacation home, unannounced, to see what’s up with their tech hero. They see the AI-based designs JJ has pinned to the walls all over his living room and immediately come up with ideas, trying to outdo one another. At the end of the weekend, the AI software which was already far along, is ready for testing. One of JJ’s engineers, AA, brought his laptop from the TweetBook office, and used it to work out some knotty software problems. As a result of this effort, JJ creates groundbreaking AI software which he calls “TweetMonster”. TweetMonster creates a psychological profile of the user,

tracks the users’ actual behavior across all electronic mediums, then creates a user specific algorithm to track and review all tweets worldwide. It then selects collections of tweets and retweets them in groups ( known as “TweetPacs”) to specifically constructed distribution lists of followers. TweetMonster also targets non-followers with specially constructed TweetPac emails and invitations to become regular twitter followers. Finally, most uniquely, the TweetMonster, calling on its AI capabilities, constructs and tweets out daily and periodic unique tweets under the name of and in the voice its users and automatically answers responses to those tweets in the name and voice of the user. It includes in its tweets sound and video and does all of this in a manner indistinguishable from what the actual user would do. JJ incorporates a company in Nevada called FaceTweets and transfers all of his property rights title and interest in TweetMonster to FaceTweets. Within 3 months, TweetMonster is a breakout rage with 5 million users. JJ considers FaceTweets to be a private side project authorized by DD. JJ continues to work as CDO for TweetBook and also serves as CDO for FaceTweets. JJ’s wife Kisha serves as FaceTweet’s President and CEO. JJ’s engineers, AA, BB, and CC all leave TweetBook and work full-time for FaceTweet. CC convinces her husband, Ethan Eisenhower (“EE”) to leave his position as Executive VP of Marketing at TweetBook and join FaceTweet. Many others at TweetBook want to join FaceTweet as well. DD is on an extended Southern Africa hunting safari during the rollout and build up of FaceTweets. The morning after his return, he is having breakfast in his office private dining room and polishing the tusk of the African Bull elephant he shot during his safari. He notices a headline in the morning edition of Tweet Times: “Jamal Jaspers; the new Darling of TweetTown.” He drops the Tusk and it shatters on the floor. He reads the article and learns all about JJ’s activities and FaceTweets. DD immediately goes downstairs to where JJ has his office and laboratories, barges in waving a copy of Tweet Times and angrily shouts JJ: “Jamal you disloyal,nerd, you will stop this TweetMonster nonsense and turn over everything right now to TweetBooks or so help me god, I will fire your ass, sue you from here to eternity, and see that you can’t even get a job as a dishwasher..” Shocked and crestfallen, JJ turns to DD and says I did nothing wrong and only did what you said was ok for me to do. I built and love this company as much as you do and FaceTweets isn’t a problem for TweetBooks.. You can fire me, but I am not going anywhere. You owe me an apology. Now get out of my lab!”

In a huff, DD leaves JJ’s lab and goes back upstairs directly to the office of TB’s general counsel’s office, Felix Finkelstein (“FF”) and explains to him what has happen and demands that he immediately fire JJ, AA, BB, and CC, stop the flow of employee departures, take action to shut down TweetMonster and seize all of its IP as properly belonging to TweetBook. Questions1. Potential Issues:

• Misappropriation of corporate opportunities • Misappropriation of trade secrets, • Trademark infringement • Patent infringement • Liability under the NDA • Liability under the Inventorship Agreement • Theft of company property • Intentional interference with contractual relationships • Unlawfully soliciting employees

2. Is TweetBook’s DRP applicable? Why? Why not?3. What are the pros/cons of the DRP relative to the “Tweet Storm” fact pattern?Abating the Storm-Application of the DRP

Step 1- Escalation/Internal Efforts at Resolution

_______________________________________________________________

Step 2-Mediation

_______________________________________________________________

Step 3-Arbitration

_______________________________________________________________

_________________________________________________________________________________Q & A

_________________________________________________________________________________________

LEARNING POINTS

1. ______________________________________________________________________________________________________________________________

2. ______________________________________________________________________________________________________________________________

3. ______________________________________________________________________________________________________________________________

4. ______________________________________________________________________________________________________________________________

5. ______________________________________________________________________________________________________________________________

Participant insights and notes:

6. ______________________________________________________________________________________________________________________________

7. ______________________________________________________________________________________________________________________________

8. ______________________________________________________________________________________________________________________________

9. ______________________________________________________________________________________________________________________________

10. ______________________________________________________________________________________________________________________________