Software Licence 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 – Software Licence – Open Source Issues

The use of open source software (OSS) by SaaS suppliers is becoming increasingly common. If you use, or plan to use OSS as part of your SaaS software, it is essential that you check the specific terms of any OSS licence, as you will need to comply with these terms and ensure that they are incorporated or reflected in your SaaS agreement.

What is Open Source Software?

OSS is software which is provided subject to a licence, which makes the source code available to everyone. Anyone is permitted to see how the source code works, change it or make it work differently. Closed source/proprietary software is the opposite of OSS and specifically prohibits such rights.

Restrictions on Use

Under the terms of an OSS licence a user is generally permitted to access, copy, modify and distribute the underlying source code, provided that no additional restrictions are placed on use of the source code when it is passed on. This clearly creates a problem for SaaS suppliers who have their own terms and conditions, which usually prevent customers from copying, modifying and distributing their source code.

Types of OSS Licences

There are a number of different OSS licences used by the open source community when making OSS available, and their terms vary considerably.

The GNU General Public Licence (GPL version 3) – includes a restriction that any copies of the OSS must be passed on free of patent licence charges.

The BSD – includes a template copyright notice and disclaimer, which must be displayed when using the OSS.

Advantages and Disadvantages of OSS

The main advantages of OSS:

  • It is free;
  • It has been extensively tested by a wide user-base, so should not contain serious bugs or defects; and
  • It is continuously being updated and improved.

However the above advantages have to be weighed against the following disadvantages:

  • There is no comprehensive support or maintenance provided for OSS;
  • You may have to disclose the source code of your proprietary SaaS software if you include OSS in your software application;
  • The limitation of liability and lack of indemnities given in OSS licences.

Liabilities and Indemnities

OSS licences only contain limited warranties about the quality and functionality of the OSS being provided. They often state that the OSS is provided „as is“. In addition no indemnities are given to protect SaaS suppliers against claims made by third parties that the OSS breaches their intellectual property rights (i.e. patents or copyrights).

This creates a serious problem for SaaS suppliers using OSS. Due to the number of people involved in developing the OSS, it is virtually impossible to verify the source and originality of the OSS. However, SaaS customers will expect the supplier to be liable for and indemnify them against breaches of any intellectual property rights of third parties.

Minimising the Risks

Selling software is core to the SaaS business model. If you use or plan to use OSS, it is essential that you carry out a technical and legal due diligence of the OSS and maintain a system thereafter to monitor the use of OSS within your organisation.

You should also clearly state in your SaaS agreement that the OSS, or components of your SaaS software, which incorporate OSS, are licenced to customers subject to the terms of the applicable open source licence.

Also, do not forget when outsourcing any SaaS software services, to ensure that you include a term in the outsourcing agreement, preventing the supplier from using OSS without your prior consent.

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, ASP Agreements – FAQs – Software Licence

The software licence to be included in a SaaS agreement is very different from the standard software licence found in non-SaaS agreements for the following reasons.

Term

Access to the software is provided together with support and maintenance services. Without support and maintenance there can be no licence and vice versa. This is because  the  customer has no copy (physical or intangible) of the source code or object code. The software is installed on the supplier’s server and accessed by the customer via the Internet.

The customer therefore does not own any software licence. The customer simply has the right to access the software and the services together for the term of the SaaS agreement. Unlike a standard software licence, no perpetual licence is granted. The term of the licence is the same as the term of the support and maintenance services and both cease to exist when the SaaS agreement is terminated or expires.

NB/It is possible to have  perpetual licence in a more complicated SaaS agreement but this is the exception rather than the norm, and is not dealt with here.

Use of the Software

The software should only be used for the specific purposes set out in the SaaS agreement. Issues such as territory, number of users, who the users are (i.e. the customer, the customer’s users, the customer’s subsidiaries and identified third parties).  No right to copy, distribute, resell or lease the software should be granted to the customer.

Intellectual Property Rights – IPR

The customer needs to be granted the right to use the software for the term, however no rights in the software, source code or support and maintenance services  should be transferred to the customer. No rights in any developed or customised software should , or can be transferred to the customer – as there will be no developed or customised software created in a standard SaaS agreement.

Copyright

No right to copy, decompile or create derivative works from the software should be granted to the customer. However, under the Copyright, Designs and Patents Act 1988 the customer has a mandatory right to decompile the software in limited circumstances, which should be referred to in the SaaS agreement, as such rights cannot be contractually excluded.

Escrow

If you are providing business critical software to customers (i.e. online banking) it is usual to offer customers the possibility of entering into an escrow agreement to hold the source code, or data in escrow. However, if the software is not business critical (to your customers) this should be an optional clause that can be added to the SaaS agreement later at the request of the customer, as most customers will not want to incur the additional cost of an escrow agent.

Help

For assistance with any software licence matters, in particular SaaS, ASP, software on demand contracts or any other IT legal issues contact me at:

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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SAAS, ASP, software on demand – confused?

What is SAAS?

This is the abbreviation for “software as a service”.  You may know this under another name, for example ASP services (application service provider) or software on demand. These names all refer to the same thing – and simply mean that you are accessing and using software via the Internet.

How is SAAS different from a standard software licence?

A SAAS agreement differs from a standard software licence, as you will not usually receive a physical or installed copy of the software. Also  no ownership in the software will be transferred to you.  You are simply given the legal right to access and use the software for the length of the software licence  granted to you.

Is a service level agreement (SLA) a software licence?

No. A service level agreement sets out the services being provided in addition to the right to use the software, namely the hosting, support and maintenance services.

Due to the unique nature of SAAS agreements to seek specialist legal advice on the content of such agreements. This will ensure that your rights are adequately protected, particularly in the event of things going wrong.

Help

For assistance with SAAS, ASP, software on demand contracts,  SLAs or any other IT legal issues contact me at:

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

To register for my newsletter click here

______________________________________________________

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