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|March 05, 2014|
|TIPs Bulletin #14-07||New Derivatives Rule|
|February 28, 2014|
|TIPs Bulletin #14-06||Charitable Donation Accounts|
|February 10, 2014|
|TIPs Bulletin #14-05||2013 California Legislative Summaries|
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Whether the lawsuit is by an opportunistic patent holder merely seeking a quick buck (such as patent trolls) or the lawsuit is based on legitimate infringement of a patent, such lawsuits represent a significant threat to any defendant. Patent suits are, by nature, extremely expensive and time consuming.
When the focus of the patent infringement is within a product or service provided to or on behalf of a credit union by a vendor, protecting the credit union from these and other types of lawsuits often depends on a properly drafted indemnification clause.
A credit union should obtain a copy of the proposed contract at the beginning of the due diligence/negotiation process as opposed to waiting until the business terms are agreed upon. Attorneys stress that contract terms are as equally important as the business terms and should be negotiated in unison.
A credit union should also inform vendors from the onset of the negotiation process that it expects the vendor to "stand behind" its product and/or service. This means the credit union should demand indemnification from the vendor (or its agents, employees, subcontractors) not only for patent infringement, but also copyright and trademark infringement.
Furthermore, the credit union should demand indemnification against claims made by any third party which arises due to the vendor's (or its agents, employees, subcontractors) breach of the contract, negligence, and/or willful misconduct.
Elements of a Good Clause
The key to a good, properly drafted indemnification clause is to:
Limitation of Liability
Care must be taken if the contract has a limitation of liability section. Without a "carve out" for indemnification obligations, a vendor's maximum indemnification obligation would be up to the limitation negotiated.
This could leave the credit union liable to the third-party claimants for all amounts in excess of the limitation, even though the credit union had nothing to do with the issue under which the claim was made.
Therefore, limitation of liability sections are equally important to review and negotiate, as are indemnification clauses.
Recent lawsuits serve as a reminder to credit unions of the importance of having contracts reviewed by an attorney, not only for proper indemnification clauses, but to help limit credit union liability.
NCUA WEBINAR: BANK SECRECY ACT
updated 03/03/14 02:26 PM
Certificate for Successful Completion
Credit union managers and compliance staff will be able to learn more about Bank Secrecy Act compliance during a free webinar, BSA-MSB Training: What You Need to Know, hosted by the National Credit Union Administration (NCUA) on March 19 at 11 a.m. (Pacific).
DBO MORTGAGE SURVEY DUE FEBRUARY 27
updated 02/20/14 07:09 PM
Also, Marijuana Biz Caution
The California Department of Business Oversight (DBO) has released its fifth Annual Commissioner’s Residential Mortgage Survey to financial institutions and third-party lenders, which DBO-licensed credit unions should complete and submit online no later than Feb. 27.