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 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.
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.
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.
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.
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:
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