The terms of your SaaS agreement will usually include indemnities to protect you or your SaaS customer, as applicable. The type and nature of such indemnities and which party should be giving them will depend upon the type of SaaS software being used and the business sector in which your customer operates.
The following indemnities are the most common indemnities that should be included in a SaaS agreement.
Intellectual Property Rights
Usually the SaaS supplier and the SaaS customer should provide each other with indemnities to cover a third party making a claim that use of the SaaS software by the customer or use of the customer’s content or software by the SaaS supplier breaches the intellectual property rights of a third party.
Similar to the IPR indemnity above the parties should provide indemnities to each other to cover claims made by an individual that their personal data has been used or processed in breach of the Data Protection Act. Often customers do not want to provide this indemnity to SaaS suppliers but this is essential as the SaaS supplier is obliged to process data in accordance with the customer’s instructions and if these instructions are in breach of data protection laws the supplier should be indemnified against any claims.
The supplier and the customer will be providing each other with confidential information. The supplier with regard to its SaaS software and the customer with regard to its content. Any unauthorised disclosure of such confidential information should be covered by an indemnity as an incentive for the parties to comply with their confidentiality obligations.
An indemnity for illegal content should always be obtained from the SaaS customer by the SaaS supplier. The SaaS customer should indemnify the supplier for all data and content which is published on its website using the SaaS software, as the supplier will not be checking or controlling the legality of the data and content. For example, if you are providing SaaS software to customers who publish online job vacancies the SaaS customer should be liable for complying with applicable employment and non-discrimination laws which will apply to the content of the advertisement.
Other Market Sectors
As in the example above, depending upon which sector your SaaS customer operates in and the type of SaaS software that you are supplying you may need to include specific indemnities in your SaaS Agreement to cover liability for breaches of guidelines and rules such as the Advertising Standards Agency (ASA) guidelines or the Financial Services Authority (FSA) rules.
Foreign Laws and Guidelines
If your SaaS customer is supplying services or products outside of the UK, you will need to extend the scope of any indemnities to include any similar foreign laws, guidelines or codes that apply to your customer and their business sector.
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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