---------------------- Forwarded by Vince J Kaminski/HOU/ECT on 04/20/2000 
08:30 AM ---------------------------


"NW on Application Service Providers" <ApplicationService@bdcimail.com> on 
04/20/2000 03:29:33 AM
Please respond to "Application Service Providers Help" 
<NWReplies@bellevue.com>
To: <vkamins@enron.com>
cc:  
Subject: Intellectual property and ASPs


NETWORK WORLD FUSION FOCUS: MIKE JUDE and NANCY MEACHIM
on APPLICATION SERVICE PROVIDERS
Today's focus: Intellectual property and ASPs
04/19/00

Dear Wincenty Kaminski,

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Today's focus: Intellectual property and ASPs
---------------------------------------------
By Mike Jude and Nancy Meachim

The deeper we get into the e-business paradigm, the more concerns we
discover.

The other day, we were talking to a manager at a large
telecommunications company who was anxious over the contractual
arrangements for an electronic-business relationship her company is
developing. Specifically, she was worried about the protection of
intellectual property in such an arrangement.

Intellectual property - or IP, as it is known to lawyers - refers to
copyrights, patents and trade secrets upon which your company depends
for its competitive advantage. In short, it,s anything you don,t want
your competitors to get their hands on. It can also include intangibles
such as goodwill from current customers.

How is IP put at risk in an application service provider (ASP)
relationship? In any ASP arrangement, a customer is forced to disclose
intellectual property to one degree or another. The property may be
simple business plans or proprietary customer information. In any event,
it is information that could do a great deal of harm if it were leaked
to competitors or the universe at large. In the case of full-service
ASPs (those that provide integration and Web design services), IP can
also include the look and feel of the business in e-space.

The problem is trust. An ASP must convince its customers that their
information is secure. But how does an ASP even know what information
needs to be protected? Customers must retain full rights to their
intellectual property and ensure that it is secure from disclosure.

The most effective way for a customer to secure IP rights and
obligations is through a contract that clearly states who owns what.
Just like a prenuptial agreement, both parties go into the arrangement
with rights and property. It is important to get these on paper prior
to the business relationship. And this contract is different from a
service-level agreement SLA). While the SLA is a performance document,
the business relationship contract is one of rights and responsibilities.

This also applies to the look and feel of the business. If an ASP
develops a Web presence for a customer that provides a unique advantage
to that customer, it is essential that the customer get its IP rights
in writing. One peculiarity of the IP world is that unless you
specifically say something to the contrary, the creator of the IP is
the owner.

The guidance Enterprise Management Associates always gives is: when in
doubt, write it down. If it offends the other party, at least you know
where the sensibilities are. If it doesn,t, then that tells you
something as well. In any case, having an obligation or right expressed
on paper establishes a point of reference if things get fuzzy in the
day-to-day ASP operation.

As our telco manager friend noted, many things are uncertain in the new
e-business world we are creating. She is right. But we will be more
confident as we proceed if we remember that the obligations of good
business practice have not changed.

To contact Mike Jude and Nancy Meachim:
---------------------------------------
Senior consultant Michael Jude and research director Nancy Meachim are
with Enterprise Management Associates in Boulder, Colo.,
(http://www.enterprisemanagement.com), a leading analyst and market
research firm focusing exclusively on all aspects of enterprise
management. Jude has over 18 years of experience in the
telecommunications industry, most recently with US West, where he was a
manager of public policy. Mike can be reached at
mailto:jude@enterprisemanagement.com. Meachim focuses on e-business
management. She is currently conducting a research study on ASP
management that is due to be released in April. Nancy's email address
is mailto:meachim@enterprisemanagement.com.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
FOR RELATED LINKS -- Click here for Network World's home page:
http://www.nwfusion.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Of Copies and Rights, Network World, 02/07/00
http://www.nwfusion.com/columnists/2000/0207bradner.html

The ASP effect on the software industry, Network World, 01/24/00
http://www.nwfusion.com/archive/2000/85264_01-24-2000.html

E-commerce: Legal finesse, Network World, 02/28/00
http://www.nwfusion.com/ecomm2000/ecomm-legal.html

Archive of Network World Fusion Focus on ASPs newsletters:
http://www.nwfusion.com/newsletters/asp/


Other ASP-related articles from Network World:

ASP specializing in customer service applications, Network World,
04/17/00
http://www.nwfusion.com/archive/2000/92655_04-17-2000.html

Aventail CEO,s software-to-services tale, Network World, 04/17/00
http://www.nwfusion.com/archive/2000/92309_04-17-2000.html


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