Increasingly SaaS customers are asking for detailed exit provisions to be included in the terms of SaaS agreements. Such requests usually cover the return of data, the provision of transition assistance and non-solicitation clauses. If such terms are not already included in your SaaS agreement it is advisable to add these in order to protect your interests upon termination of the customer relationship.
Return of Customer Data
At the end of the SaaS agreement customer data should be returned or destroyed. It should be clearly set out in the SaaS agreement what the obligation is, and time limits for compliance should be clearly stated. If customer data is to be returned, the format in which the data is to be returned should be agreed in writing in advance. If SaaS customer data is to be returned in any other format than “as is” the SaaS customer should pay for such additional services on a time and materials basis.
Return of Confidential Data
It is not just SaaS customer data that needs to returned once the SaaS agreement has expired or is terminated. The customer will hold confidential information belonging to the SaaS supplier. Accordingly, all confidential information of each party should be returned (or destroyed) and confirmation of destruction of such confidential data (as applicable) should be made in writing.
When a SaaS customer terminates the SaaS agreement they will usually be moving to a competitor. Often the SaaS customer will need assistance in transferring its data from the SaaS supplier’s system to the competitor’s SaaS system. Any such assistance should only be provided in return for payment for such additional services on a time and material basis, as such assistance could be substantial and time consuming.
Due to the nature of a SaaS agreement – the right to access software for a limited time period – the SaaS supplier should ensure that the customer’s right to access and use the software ends upon expiry or termination of the SaaS agreement. This may seem obvious to the SaaS supplier, but often customers do not understand that they are simply renting access to the software until the agreement ends and no ownership or perpetual user rights are being granted in the SaaS software.
During the course of the SaaS agreement the customer will have had close contact with key staff of the SaaS supplier. In order to prevent key staff from being enticed away from your organisation always include comprehensive non-solicitation clauses in your SaaS agreement. These should reflect the currently accepted duration and geographical limits accepted in employment contracts and if relevant, financial penalties for breaches of the restrictions can be added.
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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