Companies that provide Software-as-a-Service (“SaaS”) are engaged in a legally complex business where getting the details right is crucial to success. Getting the legal details right the FIRST TIME is just as important. To accomplish this, SaaS companies need to retain attorneys with deep knowledge of SasS business models and agreements. In this article, we will briefly discuss two of the most important requirements for SaaS service agreements and touch on a few others. The goal of crafting a good SaaS service agreement is to avoid legal pitfalls and to minimize the chances of contractual disputes.
Defining the service and what is not being provided
In our experience as SaaS contract attorneys, disputes over SaaS service agreements between providers and customers often flow from the customer’s mistaken understanding of the breadth of what is being provided. To avoid this, it is important to delineate and detail the service that is being provided AND to specify what is NOT being provided. Always, a SaaS service agreement will provide the customer with access to the applicable software application(s), updates and user support. But what about storage, back-up and security? If these aspects of the SaaS are not being provided, the service agreement must make that clear to avoid contract disputes. Indeed, specifying such matters is additionally useful since some customers may be concerned with the privacy and confidentiality of their data and, therefore, do not want storage or back-up.
SaaS contract requirement concerning data and information
This brings us to the next issue that is often a source of intense negotiation and disputes between providers and customers: contractual constraints on data/information use. We have already mentioned questions with respect to data storage, back-up and security. Other issues include:
- Protecting the privacy of data — often relates to legal requirements that any data that can personally identify an individual must be kept private
- Protecting the confidentiality of data — often more about confidential trade secret and business methods of the SaaS customer
- Sharing of data with others by the SaaS provider — with whom can the data be shared and under what circumstances?
- Length of use/storage
- Deletion of data
- Ownership of the data
Both the SaaS provider and the customer will need to have all of these issues fully negotiated and understood. The SaaS provider, for example, is just as legally liable to protect the privacy and security of consumer data as the company that is using the SaaS products.
Other SaaS contract legal issues
In addition to these two most important provisions in an SaaS service agreement, here are a number of other key provisions to be negotiated:
- Service levels
- Level, extent and to whom support service options are available
- Measurement metrics
- Dispute resolution mechanisms short of termination and litigation
- Payment
- Default provisions
- Self-remedies
- Exclusions and limitations
- Indemnifications
- Audits
- Term and renewals
- Termination provisions
Contact SaaS Law Firm Revision Legal
For more information, contact a top-tier SaaS attorney at Revision Legal at 231-714-0100. We are an SaaS law firm with deep knowledge of SasS business models and agreements. We can help with SaaS service agreements, SaaS developer, employment and contractor agreements and can provide legal services for protecting inventions, trade secrets and other IP. We also provide a full range of litigation services.
