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By Daniel R. Matlis

Recently, I have had a couple of encounters with outsourced tech support which inspired me to write this story. I’m sure you’ve had at least one similar experience.

Here is a recent “hypothetical” scenario (the names have been change to protect the innocent):

You are working remotely under a tight deadline. All of the sudden, the remote connection to the office drops and you are  dead in the water.

You try to easy stuff:

• Make sure the lights on your modem are flashing in the right sequence
• Release and Renew you IP connection
• Make sure you can get to the internet
• Shutdown and restart you machine

and still, no connection to the office.

It’s time to call the help desk. After a series of prompts and selections to get you to the right department, you hear the polite voice of the Help Desk Tech (HDT) on the other end. 

HDT: Hello, my name is Jane (not her real name), can I please have your name?
YOU: My name is Dan.
HDT: How can I help you Dan?
YOU: I am having a problem with my remote connection to the office.  I tried the following, without success:

• Made sure the lights on my modem are flashing in the right sequence
• Released and Renewed my IP connection
• Made sure I can get to the internet
• Shutdown and restarted my machine.

HDT: Let me see what we can do.
In your mind’s eye, you can see the tech’s computer “remote access issues” checklist coming up.

HDT: OK Dan, can you tell me which lights are flashing on your modem?
YOU: Jane, I tried that already. The power is on and the send and receive lights are flashing.
HDT: please click on Start then Run then type CMD
YOU: OK
HDT: please type IPCONFIG /RELEASE
YOU: Done
HDT: please type IPCONFIG /RENEW
YOU: OK, I got an IP address
HDT: please check to see if you can access the office network now
YOU: NO, I already tried that; can you please escalate the call?
HDT: Not yet, I have to go though my checklist before I can escalate the ticket. Can you open your browser and type www.are-you-annoyed.com ? (Not an actual website)
YOU (Rather Agitated): Yes, I am at there.
HDT: OK let’s try one last thing. Please restart you machine. Make sure you are holding your breath and jumping on your left foot while you restart. (The last sentence is not uttered by the tech, but that’s what it feels like to you)
YOU: My computer has restarted and I’m still unable to connect.
HDT: It looks like the problem is our side; let me escalate your ticket to Level 2 support. Once I escalate your call, you should expect to receive a call from a level 2 tech in less than 8 business hours. Is there anything else I can help you with?
YOU: No, thank you. 

Before you hang up, you look at the timer on your phone, and it reads nearly 45 minutes.

After four hours, which seemed like an eternity, you get a call from the level 2 tech. 

You explain your situation to the level 2 tech.

HDT2: I see the problem, let me change this setting and you should be ready to go.
YOU: I’m back online. That took you 2 minutes.  Why couldn’t the level 1 tech take care of that?
HDT2: We have to follow the procedures. Level one techs can’t change these settings.

So let’s do the math. An issue that took the appropriate level technician two (2) minutes to resolve cost the company forty five  minutes of the level 1 tech’s time, four hours and forty seven minutes of your time, and two minutes of the level 2 tech’s time.

The true cost outsource tech support does not seem so cheap after all.

To add insult to injury, your deadline has not moved and you’ll be up until the wee hours finishing your work (on your own time), all because you could not get to the “right” level tech in a timely manner.
 
I am not implying that companies should stop outsourcing (remember, I am in the advisory business). I do suggest that companies determine that appropriate level of outsourced and internal services to provide the best possible support to their internal and external customers.

Level 1 support techs should be provided with straight forward “triage” tools to quickly and affectively assess the type of support the caller needs, rather than following procedures blindly.

Level 1 support may be fine for the technologically challenged, but it is often a waste of time for those who try easy stuff before they call.

In today’s competitive environment, no organization can afford to waste this amount of time.

By Leslie Gladstone Restaino and
Thomas J. Dodd

Over the past several years, the Federal Courts have decided several cases involving the right of a licensee to sue for patent invalidity without first having to breach a license agreement.

Earlier this year, The U.S. Supreme Court ruled on one such case, MedImmune, Inc. v. Genentech, Inc.

Given the ongoing contractual agreement between MedImmune and Genentech and their license agreement, the Supreme Court had to determine whether a licensee could establish an “actual case or controversy” where the license that it seeks to challenge is still in force. In support of its decision to reverse the Federal Circuit, the Supreme Court held that the standard for determining whether a particular declaratory judgment action satisfies the “actual case or controversy” requirement is “whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant” relief. The Court held the standard was satisfied in the present case even though MedImmune had not refused to make royalty payments under the license agreement. The Court cited Altvater v. Freeman, 319 U.S. 359 (1943), which held that a licensee’s failure to stop paying royalties — which were paid under protest and under an injunction decree — did not make the patent dispute nonjusticiable.

The MedImmune decision has substantially muddied the waters for patent holders interested in licensing their patents to interested parties. Prior to MedImmune, so long as the patentee made no explicit threat of filing an infringement suit, there existed a degree of assurance that patent license negotiations did not constitute an actual controversy to which DJ jurisdiction attached. MedImmune effectively eliminated that assurance by extending the definition of “case or controversy” to include both explicit and implicit threats.

In the wake of MedImmune, licensees have greater freedom to challenge the validity of patents while keeping their licenses intact. Licensees now enjoy greater bargaining power to renegotiate existing licenses, thus it may be practical to renegotiate existing licenses before a lawsuit is filed. Patent owners, on the other hand, may choose to forgo licensing opportunities in light of the sword of freedom to challenge patent validity now provided to prospective licensees. There are a number of contractual workarounds that can be considered when drafting license agreements after MedImmune. Workarounds can become critical if the same patents are already licensed to other third parties (as is often the case in Life Science technology). The licensor should consider adding a provision to terminate the license in the event that the licensee challenges the validity of any underlying patented technology. Licensors should be mindful, however, of the 1969 case of Lear, Inc. v. Atkins, which treats as a nullity any attempt by a patent licensor to withhold from the licensee the ability to contest the validity of licensed patents. Nevertheless, certain provisions may be crafted to ease the impact of the “nochallenge” bar. First, the licensor should consider requiring front-loaded royalty payments or lump sum payments at the time of license execution to decrease the licensee’s financial incentive to challenge the patented technology. In the life sciences industry, however, this can be difficult to attain, as many growth-stage companies lack the resources to pay such lump sums at the outset. Moreover, many companies will make royalty payments only in the event that certain regulatory milestones are achieved. Second, the licensor should consider requiring good-faith discussions between the parties prior to the ability of the licensee to challenge patent validity. Third, the licensor must conduct negotiations without alleging or implying infringement. Other contractual workarounds include: (1) variable royalty rates that escalate during the pendency of any lawsuit challenging patent validity; (2) mandatory arbitration in the event of a patent validity or noninfringement lawsuit; (3) forum selection clauses in the event of a lawsuit; and (4) mandatory administrative proceedings (such as re-examination, and if the current patent law reform bills pass, cancellation) prior to challenging the patents in federal court. Optional termination clauses in the event of a patent validity challenge can also be considered, however, the enforceability of such provisions may be questionable in light of Lear. MedImmune has obscured the heretofore bright-line test for DJ jurisdiction in patent challenges by licensees.

From a business standpoint, this seems to decrease the long-term value of licenses, especially where the relationship between the respective parties is or has been less than harmonious.

The Authors have published a detailed article on this topic in the New Jersey Law Journal. Read a reprint.

Leslie Gladstone Restaino is a member of Sills Cummis Epstein and Gross of Newark, practicing in the intellectual property and corporate practice groups.

Thomas J. Dodd is a senior patent attorney at Johnson & Johnson.

The views and opinions express in this article are those of the authors and do not necessarily reflect those of their respective firms.