IPR Archives

SaaS Agreements – FAQs – What is SaaS and Essential Terms to include in a SaaS Agreement

SaaS is the abbreviation for “software as a service”. You may know this under another name, for example subscription agreement, software on demand, software subscription agreement, cloud computing or ASP services (application service provider). These names all refer to the same thing – software being made available via the Internet to users.

What is a SaaS Agreement

A SaaS agreement is simply the name used for the agreement between a SaaS supplier and a SaaS customer which sets out the terms under which SaaS software may be accessed. This will usually include a service level agreement (SLA).

Differences between a SaaS Agreement and a Standard Software Licence

A SaaS agreement differs from a standard software licence in that:

  • The SaaS customer will not usually receive a physical or installed copy of the software;
  • No ownership in the SaaS software will be transferred to the SaaS customer;
  • The SaaS customer ‘s right to use SaaS software will end upon termination of the SaaS agreement.

Essential Terms to Include in a SaaS Agreement

The following legal issues should be included in any SaaS agreement, whether you are a SaaS supplier or a SaaS customer.

Software Licence

Access to the SaaS software should be limited to the term of the SaaS agreement. Once the SaaS agreement expires or terminates the software licence should automatically terminate.

If the SaaS customer is a global entity, you should specify:

  • Which companies or entities may access the SaaS software;
  • In which territories the software may be used; and
  • The number of authorised users;
  • Identify the specific purposes for which the SaaS software may be accessed; and
  • Name any third parties who will be permitted access to the SaaS software i.e. outsourcing providers or clients of the SaaS customer.

Intellectual Property Rights – IPR

The SaaS supplier should retain ownership of all IPR in the SaaS software and services it provides. The SaaS customer should retain ownership of all IPR in its systems, content and data. You should specifically state that the source code remains owned by the SaaS supplier. The SaaS customer should grant the SaaS supplier the right to use its IPRs for the term of the SaaS agreement i.e. to display the SaaS customer’s logos and copyrighted information.

Applicable Law, Jurisdiction & Language

State which law applies to the SaaS agreement and any disputes arising from it. In international SaaS agreements make sure that you specify in which language the dispute will be dealt with, and if the SaaS agreement is in more than one language, which language prevails if there is a discrepancy between the two versions.

Return of Data

At the end of the SaaS agreement the SaaS customer’s data should be returned. The format in which the data is to be returned and payment for this service should be agreed in advance. Additionally the parties can agree that the SaaS supplier will provide assistance in transferring SaaS customer data to a new supplier – in return for payment for this service.

Data Protection

The SaaS supplier is the data processor and the SaaS customer is the data controller. Under data protection law different rules apply to the data controller and the data processor. The SaaS supplier is obliged to process data in accordance with the SaaS customer’s instructions and should protect itself against claims from third parties that such processing was illegal. Likewise, the SaaS customer will also need to protect itself against claims from third parties caused by the SaaS supplier not processing data in accordance with its instructions or the terms of the SaaS agreement.

From May 2018 each party’s data protections obligations must be set out in a written data processing agreement which should form a schedule to the SaaS agreement.

Service Level Agreement (SLA)

This sets out the hosting, support and maintenance services being provided to the SaaS customer by the SaaS supplier. The SLA should specify where the data centre is located, who is operating it, what security, backup and disaster recovery procedures are in place. Support hours and support services for dealing with hosting problems and software problems should be identified and documented and the procedure for dealing with upgrades and maintenance to the software should be specified. The particular details will depend on the amount being paid for the hosting, support and maintenance and the purpose for which the SaaS software is being used.

Summary

Due to the unique nature of SaaS agreements you will need to seek specialist legal advice on the content of a SaaS agreement whether you are a SaaS supplier or a SaaS customer to ensure that your rights are adequately protected and that you are fully complying with all applicable laws.

Help

Irene Bodle is an IT lawyer specialising in SaaS, with over 14 years experience dealing with SaaS, cloud computing matters and IT law issues. If you require assistance with any SaaS agreements, cloud computing matters or any other IT legal issues please contact me at:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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SaaS Agreements – IPR – Software Patents

The issue of software patents has recently been highlighted by a proposal to change German patent and copyright law. The proposal recommends preventing computer software being registered as a patent, arguing that computer software should only be protected using copyright law, as this is sufficient to protect a software developer’s rights. In light of the current German proposal, below is a brief summary of patent and copyright law in relation to SaaS software in the UK, Germany and non-EU countries.

Patents

A patent protects a new invention and covers how things work, what they do, how they do it, what they are made of and how they are made. It gives the owner the right to prevent others from making, using, importing or selling the invention without permission. Generally SaaS software cannot be patented in the UK but there are limited exceptions which are set out below in more detail.

Software Patents in the UK

Despite the general presumption that SaaS software cannot be patented in the UK, it is possible to patent some computer software inventions in the UK. This is because software uses technology (computers) but often for non-technical purposes. Whether a computer software invention is patentable depends on the contribution the invention makes. For example, if computer software provided improved control of a car braking system, it would be likely to be patentable in the UK, but if it merely provided an improved accounting system, it would probably not be patentable in the UK.

Patents outside the UK

The law on what is patentable within the EU is generally the same as in the UK, as national patent laws are derived from the European Patent Convention (EPC). However, individual EU countries may interpret the terms of the EPC differently resulting in different rules actually applying in each EU country. For example, in Germany only software that substitutes a mechanical or electro-magnetic component is patentable. Outside of the EU in the US and Japan software patents can be registered with very few restrictions.

Copyright v Patent Law

Copyright alone does not adequately protect computer software as it does not protect the functionality of software. This is because copyright only protects the expression of ideas in the software NOT the ideas themselves. For example, if a third party substantially modified your SaaS software to create its own software that performed exactly the same function it would not breach your copyright as there is no ‘copying’ of your SaaS software.

The main objection to the use of patents to protect SaaS software, particularly in the open source software community and companies which use and contribute to open source, is that patents impede and/or prohibit the distribution of free software, as licence fees become payable for use of the patents. This results in technological progress being hindered and allows monopolies and powerful companies to exclude others from developing computer software e.g. Amazon “one-click” which is patented in the US but not in the EU.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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SaaS Agreements – FAQs – Source Code

When negotiating a SaaS agreement you will come across the terms source code, object code and open source. What is the difference if any between source code, object code and open source?

Source Code

Source code is the version of a computer programme (SaaS software) that exists prior to the software being ready to compile and run on a computer. The source code consists of a number of statements created in a text form by a programmer. These statements are saved in a named file and are called the source code.

The source code is human-readable but cannot be executed directly by a computer. The source code needs to be translated so that a computer can interpret it. This is done by compiling the source code into a format that a computer can interpret – the object code.

Do note there are some exceptions to the above. For example, modern source code can often be the same as the object code where no compilation is required. An example of such code is HTML, which is used to build most websites.

Object Code

Object code is the version of a computer programme that is created when the source code has been translated and compiled by a special programme. The object code file contains a sequence of instructions that can be executed directly by a computer. The object code is difficult for a human to read or modify.

Open Source Code

Open source code (OSS) refers to the version of a computer programme (SaaS software) in which the source code is made available and licenced to the general public. The open source licence gives users the right to study, modify and distribute the source code free of charge. Open source code is often created as a collaborative effort in which programmers improve the source code and share changes within a community.

Importance of Source Code

When source code is translated into object code, a lot of information is lost. As a result of this it is not possible to fully reconstruct the original SaaS software source code from the object code. Accordingly, it is sometimes advisable to have the source code held by a third party in escrow to ensure that you have access to the SaaS source code in the event of the insolvency of, or access and maintenance issues with your SaaS supplier. If you do not have access to the source code you will be unable to continue to use the SaaS software.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

______________________________________________________

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SaaS Agreements – FAQs – IPR and Intellectual Property

When negotiating a SaaS agreement you will come across the term intellectual property, IPR or intellectual property rights. It is important to protect your IPRs in the SaaS agreement to prevent any transfer of ownership in your IPRs and to limit the use of your IPRs by a SaaS customer.

What is Intellectual Property?

Intellectual property refers to any intangible property created by authors, artists, and inventors and includes inventions, literary and artistic works, symbols, names, images, and designs. In a SaaS agreement this will be the computer data, source and object code, website design and layout, know-how and technical information created by your employees, consultants, software developers, agents and partners.

What are Intellectual Property Rights (IPRs)?

Intellectual property rights relate to specific types of intellectual property, which in a SaaS agreement will generally include but not be limited to trademarks, patents, domain names, database rights and copyright in the aforementioned intellectual property.

Below are some brief explanations of the most common IPRs relevant to a SaaS agreement.

Copyright

Copyright is the right to stop others from copying works without permission. Copyright in SaaS software derives from the software being an original literary work. Copyright protects the expressions of ideas in the SaaS software NOT the ideas themselves. It will include the layout or design of a website. Copyright cannot be registered in the UK but can be registered in the USA.

Trademark

A trademark is a sign that can distinguish your SaaS services from those of your competitors (also known as your “brand”). In the UK, a trademark must be registered to be protected. A trademark can be registered as a word mark, or a picture mark i.e. with a logo or a combination of both. Trademarks can also be registered with, or without, colours.

Patent

A patent protects new inventions and covers how things work, what they do, how they do it, what they are made of and how they are made. It gives the owner the right to prevent others from making, using, importing or selling the invention without permission. Generally software cannot be patented in the UK but can be patented in the USA.

Protecting your IPRs

A SaaS supplier should always retain ownership of its IPRs. Your SaaS agreement should simply grant a customer the right (a licence) to use your intellectual property subject to the terms of the SaaS agreement for the duration of the SaaS agreement. No IPRs should be transferred to a customer unless this has been specifically agreed between the parties i.e. where customised, developed software is being provided, and even then the SaaS supplier should always retain the right to continue to use the intellectual property in its business.

Summary

In view of the many different types of intellectual property and the nature of SaaS agreements it is essential that you identify the IPRs that need protecting in your SaaS terms and conditions and that you adequately protect such IPRs against misuse and/or inadvertent transfer of ownership to your customers.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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SaaS Agreements – Software – Copyright Protection

SaaS Software with the same functionality can co-exist without there being an infringement of copyright, following the recent opinion of the Advocate General in SAS Institute and World Programming Ltd. The Advocate General advised that it is the methods used to create the means for the software to carry out its functions, not the functions of the software and the programming language which can be protected by copyright.

What is Copyright?

Copyright is the right to stop others from copying works without permission. Copyright in SaaS software derives from the software being an original literary work. Copyright protects the expressions of ideas in the SaaS software NOT the ideas themselves.

SAS Institute and World Programming Ltd

The High court referred this case to the European Court of Justice (ECJ). World Programming Ltd was accused of infringing copyrights in SAS Institute software as a result of using information contained in the SAS Institute manuals (not the source code) to develop rival software. SAS Institute argued that the functions of its software were copyright protected pursuant to the Computer Programs Directive. This Directive protects copyright in the expression in any form of a computer programme. It does not however cover ideas and principles which underlie any element of a computer programme, including those which underlie a computer programme interfaces.

Are Software Functionalities Protected by Copyright?

The Advocate General ruled that the functionalities of software are simply “the service which the user expects” from the computer programme. For example, when using software to book an airline ticket the functionalities of the booking process will be the same regardless of which company’s software you use. Such services cannot be protected by copyright. However, what can be protected by copyright, is the means by which the functionalities are achieved as this reflects the author’s own intellectual creation. Protection will depend upon the degree of originality in the writing of the software.

This is not the end of the matter, as the ECJ still has to make a ruling on this case. However the ECJ usually follows the opinion of the Advocate General. In which case, the ability of SaaS software suppliers to prevent the functionality of their software being replicated in the future will be limited, if it is not the SaaS software source code that is replicated.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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How to Register an EU Trademark

Where do I Apply?

In order to register a community trademark an application must be made to OHIM in Spain. The application can be made in English or any other EU language and OHIM will translate the application into a second EU language of your choice. One registration will cover the registration of the trademark in all 27 EU member states.

Costs

Currently, the cost of registering a trade mark in three classes is 900 Euros (if applying online) or 1,050 Euros if the application is made on paper. If you want to register a trademark in more than 3 classes, each additional class will cost an extra 150 Euros.

Trademark Search

Before applying for a trademark you must carry out a search to see if anyone has already registered the trademark, or applied to register the trademark. You also need to consider whether or not the trademark is capable of registration. For example it cannot be generic i.e. “business” or “dog” and there are certain words that you cannot use. A trademark can be registered as a word mark, or a picture mark i.e. with a logo. Trademarks can also be registered with, or without, colours.

The Application Process

You need to file an application with a description for each of the classes that you have chosen. There are more than 40 classes which cover the various goods or services which can be registered. Once OHIM receives the completed application and fee, it will examine the application. This involves amending the description or moving the description of the goods and services to different classes or rejecting the application in part or in whole.

Opposition and Registration

The trademark is then published to permit persons or entities to register their opposition to the registration of the trademark. Anyone who wishes to oppose registration of the trademark has 3 months to register such opposition. In the meantime, you will be sent a search report for similar trademarks by OHIM. If no-one opposes the trademark, protection is granted for 10 years. If any oppositions are raised these must be successfully disputed in order for the trademark to be registered.

Help

For assistance with registering an EU trademark  or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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SaaS Agreements – Essential Elements

The following legal issues should be included in any SaaS agreement, whether you are a SaaS supplier or a SaaS customer.

Software Licence

Access to the software should be limited to the term of the SaaS agreement. Once the SaaS agreement expires or terminates the software licence should automatically terminate.

If the SaaS customer is a global entity, specify which companies or entities may access the SaaS software, in which territories and the number of users. Identify the specific purposes for which the software may be accessed. Name any third parties who will be permitted access to the SaaS software i.e. outsourcing providers or clients of the SaaS customer.

Intellectual Property Rights – IPR

The SaaS supplier should retain ownership of all IPR in the software and services it provides. The SaaS customer should retain ownership of all IPR in its systems and data. The SaaS agreement should specifically state that the source code remains owned by the SaaS supplier. The SaaS customer should grant the SaaS supplier the right to use its IPRs for the term of the SaaS agreement i.e. display its logos and copyrighted information.

Applicable Law, Jurisdiction & Language

State which law applies to the SaaS agreement and which courts will deal with any disputes arising from it. In international SaaS agreements make sure that you specify in which language the dispute will be dealt with, and if the SaaS agreement is in more than one language, which language prevails if there is a discrepancy between the two versions.

Return of Data

At the end of the SssS agreement the SaaS customer’s data should be returned. The format in which the data is to be returned and payment for this service should be agreed in advance.  Additionally the parties can agree that the Saas supplier will provide assistance in transferring SaaS customer data to a new supplier – in return for payment for this service.

Data Protection

The SaaS supplier is the data processor and the SaaS customer is the data controller. Under UK data protection law different rules apply to the data controller and the data processor. The SaaS supplier is obliged to process data in accordance with the SaaS customer’s instructions and should protect itself against claims from third parties that such processing was illegal. Likewise, the SaaS customer will also need to protect itself against claims from third parties caused by the SaaS supplier not processing data in accordance with its instructions or the terms of the SaaS agreement.

Service Level Agreement (SLA)

This sets out the hosting, support and maintenance services being provided to the SaaS customer by the SaaS supplier. The SLA should specify where the data centre is located, who is operating it, what security, backup and disaster recovery procedures are in place. Support hours and support services for dealing with hosting problems and software problems should be identified and documented and the procedure for dealing with with upgrades and maintenance to the software should be specified. The particular details will depend on the amount being paid for the hosting, support and maintenance and the purpose for which the software is being used.

Escrow

Specify who the owner of the source code is, as it may not be the supplier i.e. the holding company of the supplier. State whether or not the customer can enter into an  agreement with a third party to hold the source code in escrow.  Include the name of the escrow agent and who will be responsible for the costs of the escrow agreement and any annual renewals.

Help

Irene Bodle is an IT lawyer specialising in SaaS, with over 14 years experience dealing with SaaS, cloud computing matters and IT law issues. If you require assistance with any SaaS agreements, cloud computing matters or any other IT legal issues please contact me at:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

______________________________________________________

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Website Legal Requirements – Ecommerce

Does your website comply with the various legal requirements in the UK?

Below, I have set out the main legal requirements (including some optional recommendations) that you should be complying with.

Mandatory Requirements

About Us/Contact Information

You must provide the following information in an easily accessible position on your website:

  • your legal name i.e. XYZ Ltd
  • your geographical address
  • contact details i.e. telephone number, fax number and email address
  • which country your business is registered in and the registration number
  • details of any supervisory body which regulates your business i.e. the FSA. For regulated bodies more detailed information is required.
  • where you are registered for VAT and your VAT number
  • clear details of prices and whether or not delivery and/or tax is included

Registration under the Data Protection Act

If you collect any personal data on your website – i.e. email address, name or address of a living individual, you will be processing personal data and must register as a data controller under the Data Protection Act. It is a criminal offence not to register.

Privacy Policy

If you are collecting, storing or processing personal data you need to set out how and why you are doing this to comply with the 8 principles of the Data Protection Act. In particular if you are sending marketing emails to potential customers you need to ensure that you have obtained specific consent, BEFORE such emails are sent. Consent should be covered in your privacy policy and the registration process on your website.

Disabled Access to your Web Site

If you offer goods or services on your website you need to make your website accessible to disabled users. Level 1 compliance with the WC3 standard will usually suffice.

click here for further details on WC3 compliance

Trade Marks and Logos

Do not use other people’s trade marks or logos without their consent on your website or you could be liable to pay damages for trade mark infringements.

Copyright

Do not use other people’s content without their consent on your website, or you could be liable to pay damages for copyright infringements. If you have links to other people’s content, make sure that this is permitted in their terms of use and ensure that the information opens in a new frame.

Online Payment

If you accept online payment for goods or services you must provide customers with specific information about their right to cancel, VAT and prices, refunds and defective goods PRIOR to the sale being concluded.

Recommended Requirements

In addition to the above mandatory rules it is advisable to have the following, in addition.

Terms of Use/Disclaimer

You should set out the rules applicable to persons using and accessing the goods and services on your website. For example state who may access the website i.e. consumers, businesses, over 18s. You should also aim to limit your liability for information on the web site. For example state which law applies, your limits on liability etc. However, please note that you cannot exclude or limit certain liabilities in particular circumstances  – particularly in relation to consumer, injuries caused by goods and services, or defects in your goods and services.

Copyright Notice

Protect the information on your website by inserting a copyright notice “© company name 2010.  All rights reserved.” Without this notice,  it may be difficult in some countries to take any action against a copyright infringement.

The above are examples of the main legal requirements for websites. This is a very complicated area of law and the specific rules that apply to you will depend on what goods and services you are offering, whether you are acting BTB (business to business) or BTC (business to customer), where you are based, where your customers are located and many other factors.

Help

If you would like to have your website reviewed for compliance with English law or have any queries about compliance please contact:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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