If your company is like most U.S. businesses, it has been severely impacted by the ongoing coronavirus crisis and the stay-at-home orders that have been mandated across the country.  Legislation was recently passed by Congress and signed into law that may make available disaster relief to your company: the Coronavirus Aid, Relief, and Economic Security Act (the “CARES” Act).

The CARES Act established a new business loan program, the Paycheck Protection Loan Program (“PPP”), which will enable a U.S. company qualifying as a small business to receive a loan in the amount of 2.5 times the company’s monthly payroll costs.  As part of the PPP, companies may be eligible for loan forgiveness on any loan proceeds applied during the eight-week period immediately following receipt of the loan towards payroll, rent, utilities, and interest on mortgage and debt obligations incurred prior to February 15, 2020, provided that all employees are kept on the payroll for the eight week period and the documentation verifying the use is submitted to the lender.   Any loan proceeds that are not forgiven will have a maturity of 2 years and an interest rate of 1%.  The program is described in more detail on this weblink.  The interim regulations describing how the program will work are linked here and the FAQ addressing questions and answers is linked here.

To participate in this loan program, your company should submit an application through your primary bank.  Alternatively, many online and non-bank business lenders are also participating in the loan program, so working through such a lender may be an available option.

In addition, your company may be eligible for an economic injury disaster loan advance of up to $10,000. Originally these advances were supposed to be available within 3 days of submitting an application; however, this now been revised to remove a deadline.  Advances should be requested directly through the SBA website at this link.  The loan advance will not have to be repaid but the amount may be deducted from a subsequently obtained PPP loan.

It is anticipated that the funds allocated to this program are going to run out before all the applications are processed, so companies are being encouraged to submit applications as soon as possible.  It is unfortunately not clear how long businesses will have to wait to receive the aid.  To date, the Silicon Valley IP Licensing Law Blog is only aware of one approved business and has heard of no business actually receiving any aid through these programs.

Silicon Valley IP Licensing Law Blog Attorney Kristie Prinz will be presenting a webinar on October 8, 2019 at 10 a.m. PST on “Best Practices for Negotiating SaaS Contracts & Managing SaaS Customer Relationships.”  The program will address the following topics:

• What makes an effective customer contract?
• What are the essential terms in a well-drafted SaaS contract?
• What are the common issues that arise in SaaS negotiations? What are the best strategies to resolve them?
• What are the best practices to manage the customer relationship?

To learn more about the webinar and register, please visit The Prinz Law Store website at: http://prinzlawstore/com/2019/08/saas-contracts/.

The Prinz Law Office, which publishes the Silicon Valley IP Licensing Law Blog, has announced the opening of its new San Francisco Office. The new location will enable the firm to better serve clients in the northern Peninsula, the North Bay, and San Francisco. For more information on the announce, check out our press release linked here.

Silicon Valley IP Licensing Law Blog’s Kristie Prinz will present a webinar on “Best Practices for Drafting Master Service Agreements & Managing the Service Relationship” on Friday, March 8, 2019 at 10 a.m. PST 1 p.m. EST.  The Prinz Law Office will sponsor the event, which is intended for lawyers as well as businesspeople.  To register for the event, please sign up at

http://prinzlawstore.com/2019/01/best-practices-for-drafting-master-service-agreements-managing-the-service-relationship/

Silicon Valley IP Licensing Law Blog’s Kristie Prinz will be presenting a webinar on “Best Practices for Drafting SaaS Contracts & Managing SaaS Customer Relationships” on February 19, 2019 at 10 a.m.PST 1 p.m. EST.  The Prinz Law Office will be sponsoring the event, which will be intended for lawyers as well as businesspeople.  To register for the event, please sign up here:

http://prinzlawstore.com/2019/01/drafting-saas-contracts-managing-saas-customer-relationships/.

The recent expansion of powers of the Committee of Foreign Investment in the United States (also known as “CFIUS”) by the passage of The Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”) has many Silicon Valley dealmakers concerned about the challenges CFIUS may pose going forward for business transactions in the technology industry.  As you may know, the legislation significantly expands the powers of CFIUS to conduct national security reviews of pending business deals and imposes penalties on businesses for compliance failures, which will clearly complicate the ability of U.S. businesses in Silicon Valley to close transactions involving foreign investment.  For more information on the key of FIRRMA and the national security review process which will be in place going forward, check out the U.S. Treasury website established to educate the public on the issue.

What types of business transactions are going to be affected by the new rules?  Now, not only will CFIUS have the power to review proposed mergers, acquisitions, or takeovers that could result in foreign control of a U.S. business, but CFIUS will also be able to conduct national security reviews of the following deals:

• A purchase, lease, or concession by or to a foreign person of real estate located in proximity to significant government facilities.
• “Other Investments” by a foreign person in any unaffiliated U.S. business that owns, operates, manufactures, supplies, or services critical infrastructure; produces, designs, tests manufactures, fabricates, or develops one or more critical technologies; or maintains or collects sensitive personal data of U.S. citizens that may be exploited in a manner that threatens national security.
• Any change in rights that results in foreign control of a U.S. business or an “other investment” as defined above.
• Any transaction, transfer, agreement, or arrange, the structure of which is intended to evade the review of the committee.

As you might expect, the second point is what is perhaps most concerning to many in Silicon Valley.  Of particular concern, is how two terms are being defined: “Other Investments” and “critical technologies.” FIRMMA defines “Other Investments” as “any investment, direct or indirect, by a foreign person in a U.S. business” that affords the foreign person

• access to any material nonpublic technical information in possession of the United States business
• membership or observer rights on the board of directors or equivalent governing body of the U.S. business, or the right to nominate an individual to a position on the board of directors or equivalent voting body, or any involvement other than the voting shares in the substantive decision making of the U.S. business;
• the use, development, acquisition, safekeeping, or release of sensitive personal data of U.S. citizens maintained or collected by the U.S. business;
• the use, development, acquisition, or release of critical technologies;
• the management, operation, manufacture, or supply of critical infrastructure.

FIRRMA defines “critical technologies” to include:

• Defense articles or defense services;
• Items included on the Commerce Control List and controlled pursuant to multilateral regimes, including for reasons relating to national security, chemical and biological weapons proliferation, nuclear proliferation, or missile technology, or for reasons relating to regional stability or surreptitious listening;
• Specially designed and prepared nuclear equipment, parts and components, materials, software, and technology covered by part 810 of title 10, Code of Federal Regulations (relating to assistance of foreign atomic energy activities);
• Nuclear facilities, equipment, and material equipment, and material covered by part 110 of title 10, Code of Federal Regulations (relating to export and import of nuclear equipment and material);
• Select agents and toxins covered by part 331 of title 7, Code of Federal Regulations, part 121 of title 9 of such Code, or part 73 of title 42 of such code; and
• Emerging and foundational technologies controlled pursuant to section 1758 of the Export Control Reform Act of 2018. 

While the full impact of the law is still to be determined, the interim rules already establish that transactions are going to be subject to review in a variety of industries represented by Silicon Valley, including but not limited to:

• computer storage device manufacturing;
• electronic computer manufacturing;
• optical instrument and lens manufacturing;
• primary battery manufacturing
• wireless communications equipment manufacturing
• research and development in nanotechnology
• research and development in biotechnology;
• semiconductor and related device manufacturing;
• semiconductor machinery manufacturing;
• storage battery manufacturing; and
• telephone apparatus manufacturing.

As our affiliate blog, The Silicon Valley Software Law Blog, also noted in a recent post, the software industry is also potentially going to be impacted.

While the implications of this new expansion of national security review powers are still unknown, the concern is clearly that many technology business deals are going to be subject to more federal compliance obligations going forward when the deals involve any foreign investment, that these compliance obligations could potentially slow down or even derail the closing of deals, and that the compliance obligations may subject Silicon Valley companies to significant fines up to the amount  of the deal if they fail to meet these new obligations.  The concern for licensing deals and IP transactions generally is that CFIUS is going to impose new barriers to closing these types of deals.

The Silicon Valley IP Licensing Law Blog will continue to follow the developments regarding this law and how it is applied and interpreted to Silicon Valley companies going forward.

Silicon Valley IP Licensing Law Blog’s Kristie Prinz will present a webinar on “Negotiating SaaS Agreements: Drafting Key Contract Provisions, Protecting Customer and Vendor Interests” for Virginia-based Clear Law Institute on February 8, 2019 at 10:00 a.m. PST/1 p.m. EST.  The program will be sponsored by Virginia-based Clear Law Institute, which is making available a 35% discount off the registration fee with the discount code KPrinz148075.  To register, please sign up here: https://clearlawinstitute.com/shop/webinars/negotiating-saas-agreements-drafting-key-contract-provisions-protecting-customer-and-vendor-interests-020819/.

Silicon Valley IP Licensing Law Blog Sponsor, The Prinz Law Office, has announced today the launch of a new option for clients: the “subscription model” billing model.  The firm will initially be offering daily and half-daily subscription models.  The model is anticipated to potentially be a good fit with companies having ongoing legal review or advice needs in the transactional space that can be easily anticipated and scheduled in a pre-set block of time.

For information about how the new subscription model will work, please contact the firm for additional information.

Silicon Valley IP Licensing Law Blog Author Kristie Prinz will be presenting a webinar on “Negotiating SaaS Agreements: Drafting Key Contract Provisions, Protecting Customer and Vendor Interests” for Clear Law Institute on 10/26/18 at 10 a.m. PST.  Clear Law Institute is providing a registration discount for attendees who register with the discount code: KP119433.  To register, sign up at the following link: https://clearlawinstitute.com/shop/webinars/negotiating-saas-agreements-drafting-key-contract-provisions-protecting-customer-and-vendor-interests-102618/.