João de Travassos: "It is important that the technological choice is adequate for the needs of the company"

João de Travassos, the founding partner of Travassos, Albuquerque & Associados, discusses the biggest technological issues facing Portuguese companies today.

Posted jeudi, septembre 15 2022
João de Travassos: "It is important that the technological choice is adequate for the needs of the company"

Leaders League: What are the most pressing issues companies face with regard to technology? 

João de Travassos: The issues reveal themselves in many ways. Essentially, they all boil down to the very nature of technology in its relationship to the internal nature of a company. This can be boiled down to one issue that dictates the success or failure of that relationship, whatever the company’s sector: adequacy. From a business perspective, internal methods and procedures are increasingly technology-related and dependent. The pandemic convinced the most skeptical. Technology runs vertically through companies, from production to management. But it is important that the technological choice is adequate for the needs of the company, both for its internal structure and its business. A functionally inadequate product, even if it is the best on the market, complicates procedures instead of facilitating them. This is also the case with a materially inadequate product because technology creates dependence, and dependence goes hand in hand with the reliability of the product. But the problem is not only in the adequacy of the product to the company, but also the adaptation of the company to the product itself, namely in training and qualifications. In this field, adaptation is permanent because technological evolution is also permanent. When we buy a new mobile phone, we also experience this problem of adequacy, not only with issues related to the transfer of information, but also because we are using a new system. We also bought it because it has new features, but they should be adapted to our needs. Due to the dependence that a mobile phone brings, we bet on its reliability. The big difference in this case is that our choice may not be rational. On the other hand, companies’ choices must be rational. Inadequacy is undoubtedly the biggest problem that we have experienced in the technological business. 

 

What are the biggest challenges of software licensing contracts in Portugal? 

In Portugal, the dependence of a company on ERP business software is mandatory due to the need for electronic invoicing and reports to the tax authority. The first challenge for the software producer, which occurs prior to licensing, is the software certification process with the Portuguese tax authority. In addition, I would say that the main challenge is managing the client’s expectations with regard to the project, which must be clearly defined in the contract. Because the legal relationship between the provider and the client is often inadequately or unclearly defined, potential problems that could have been avoided are introduced at the outset. We have seen profound contractual inadequacies in Portugal’s legal environment ranging from the complete lack of contracts to contracts that lack conditions or service-level agreements, or which have been translated into Portuguese from other languages that include provisions that are illegal under Portuguese law. In addition, licensing agreements are invariably linked to other service-based contracts, whether through implementation, training, or maintenance. The legal relationship between provider and client is often inadequately understood by the client and the vast majority of disputes are based on these misunderstandings. That is why we always say that in addition to a good product it is necessary to have a good contract. 

 

What do companies need to be aware of to adopt the cloud model for software contracts and IP protection? 

Since the late 2000s, the cloud model has democratized infrastructure and software. The cost-optimization advantages for companies are numerous, including continuous updates, increased service availability, flexibility in infrastructure, modules, applications, and users, always-on access to information, and greater data security. Data that includes information on IP and trade secrets is vital for companies, particularly when those assets are revenue drivers. The primary concern for companies that adopt the cloud model should therefore be which technologies are used to protect and secure that data. Unlike consumers, companies do not have the luxury of assuming that their data will be stored securely and that there is no risk of critical data becoming public. They must therefore ensure that guaranteed data and backup recovery measures are in place. It is essential that prior critical analyses and assessments are laid out in clear terms in the contract. One of the major advantages the cloud model has created for providers is greater payment security and enforceability due to the provider’s ability to immediately cut off access to their services. Unlike previous models, the cloud model allows providers to make access to their services contingent upon payment by the client. Clearly defined rules on data retention and access in the event of non-compliance or contract termination is another important element to consider.

 

How are blockchain technology and smart contracts changing the landscape for copyrighted materials? 

It’s been said that we are seeing a revolution in this area. I view it as more of an evolution. The challenge is to appropriately apply the existing legal framework for IP rights to the new opportunities created by these technologies. We are not inventing new rights or revolutionizing the way they are created but developing better methods for protecting them. The application of distributed ledger technology to IP rights makes it possible to limit problems related to protecting and managing IP rights in a digital context by increasing information transparency and accessibility to protecting works, facilitating their licensing, and reducing the associated costs. This technology has improved companies’ ability to supervise the distribution and monitor compliance, while smart contracts have created a better and easier way to prove the legitimacy of IP rights. This has created numerous advantages, especially for copyrights that cannot be acquired through traditional registration models. As a result, we’ve seen the emergence of new applications to manage IP rights based on blockchain technology. Of course, many issues remain unresolved, such as reliability, data ownership, privacy, system liability, jurisdictional applicability, and the principle of exhaustion. The inflexibility of smart contracts due to the programming language they are written in means there is less room to modify terms as a result of negotiation and legal interpretations. There are also technical issues that still need to be addressed, such as system storage capacity and operational flexibility between different platforms. As I said, this is more of an evolution than a revolution, and it is incumbent that we participate in it.