SaaS On A EULA? Get Some New Pants!

SaaS on a EULA? Get Some New Pants!

A good contract is like a good pair of pants. When the pants fit right and look good, you wear them all the time and hardly notice them. But if they’re too tight, you won’t buy them and if they’re too loose they fall down and leave you exposed. And if they’re just wrong – like trying to pair hockey pants with a suit coat – nobody knows what to do with you.

As more and more software companies deliver SaaS instead of software CDs, why do I still see so many EULAs? They aren’t quite as bad as hockey pants with a suit, but I’d say they approach wearing hockey pants for skiing. Yes, they’re warm and in the winter sports category but they leave a lot of bare leg and have way too much unnecessary padding.

First let’s talk about the fundamental differences between licensed software and SaaS. One is a right to take a copy of some technology to your home or office, install it on your computer and use it all by yourself (or with the other users in your company). Your data stays with you. The other is a service provided by a vendor which allows you to input and review data that is processed somewhere else. No software is delivered. No copies of technology are made for the users. But your data is processed and stored outside of your computer.

So, one is a license – a right to get a copy and use IP – and the other is a service – that processes and stores information. They really are different pants even if software is involved in both.

The legal community has done a good job of drilling the importance of protecting IP into software developers. Yes, intellectual property rights are what make that wonderful technology valuable. Tie them up tight in your license agreement, use license keys and other mechanisms to control users and audit them to make sure they aren’t proliferating without paying.

But do you know the best way to protect IP? Don’t share it. Don’t let anyone see it or get a copy. In other words, use it to deliver a service: SaaS. No license is required when IP isn’t shared (There go the huge pads on the hockey pants). And granting a license for IP that isn’t delivered could result in the unintended requirement to deliver it (Those pants fall right down around the ankles).

The legal community hasn’t done a good job of advising SaaS users of the risks of losing control of their data and the means to process it themselves. SaaS customers under a EULA don’t get any assurances about how the vendor will protect their data (Those hockey pants are too short for the slopes). They don’t know what kind of backup procedures the provider has or how to get their data back in a meaningful format. Because the contract won’t address data issues at all, it doesn’t even say that the client owns its data (Get me some ski pants!).

In summary, my last pants analogy: if you’re selling SaaS with a EULA, get some new pants.

By Cindy Wolf

Cindy Wolf is a Colorado lawyer with more than 25 years experience representing large and small domestic and multinational companies. Her expertise is in helping companies enter the cloud safely, either as providers or users. She also practices in the areas of corporate law and commercial contracting, with an emphasis on international issues. She can be reached at cindy@cindywolf.com.

About CloudTweaks

Established in 2009, CloudTweaks is recognized as one of the leading authorities in connected technology information and services.

We embrace and instill thought leadership insights, relevant and timely news related stories, unbiased benchmark reporting as well as offer green/cleantech learning and consultive services around the world.

Our vision is to create awareness and to help find innovative ways to connect our planet in a positive eco-friendly manner.

In the meantime, you may connect with CloudTweaks by following and sharing our resources.

View All Articles

Sorry, comments are closed for this post.

Data Protection and Session Fixation Attacks

Data Protection and Session Fixation Attacks

Keeping the man out of the middle: preventing session fixation attacks In a nutshell, session fixation is a type of man in the middle attack where an attacker is able to pretend to be a victim using a session variable. For instance, let’s say you have an application that uses sessions to validate the user.…

E-Commerce Advances For Savvy Marketers

E-Commerce Advances For Savvy Marketers

Digital Marketing Platforms Advertising and marketing techniques have progressed rapidly in the last decade with both channel focus and the direction of content shifting considerably due primarily to advances in cloud technology. Gartner’s Magic Quadrant for Digital Commerce 2016 singles out a few ecommerce providers who are topping their sector in both ability to execute…

The Lighter Side Of The Cloud – Energy Battle

The Lighter Side Of The Cloud – Energy Battle

By David Fletcher Please feel free to share our comics via social media networks such as Twitter, Facebook, LinkedIn, Instagram, Pinterest. Clear attribution (Twitter example: via@cloudtweaks) to our original comic sources is greatly appreciated.

Recent Articles - Posted by
Cloud Comings and Goings

Cloud Comings and Goings

Cloud Power Amazon Web Services – the giant of cloud computing – is on track to do $10 Billion in revenue this year. Yet, rumors swirl that Apple may take a huge chunk of business away from them and Dropbox has definitely left AWS. Is something wrong at AWS? Wait, Salesforce.com (SFDC) – the granddaddy of…

Digital Transformation: Not Just For Large Enterprises Anymore

Digital Transformation: Not Just For Large Enterprises Anymore

Digital Transformation Digital transformation is the acceleration of business activities, processes, and operational models to fully embrace the changes and opportunities of digital technologies. The concept is not new; we’ve been talking about it in one way or another for decades: paperless office, BYOD, user experience, consumerization of IT – all of these were stepping…

Cloud Computing Offers Key Benefits For Small, Medium Businesses

Cloud Computing Offers Key Benefits For Small, Medium Businesses

Cloud Computing Benefits A growing number of small and medium businesses in the United States rely on as a means of deploying mission-critical software products. Prior to the advent of cloud-based products — software solutions delivered over the Internet – companies were often forced to invest in servers and other products to run software and…

Cloud Security: The Top 8 Risks According To ENISA

Cloud Security: The Top 8 Risks According To ENISA

Cloud Security Risks Does security in the cloud ever bother you? It would be weird if it didn’t. Cloud computing has a lot of benefits, but also a lot of risks if done in the wrong way. So what are the most important risks? The European Network Information Security Agency did extensive research on that,…

5 Surprising Ways Cloud Computing Is Changing Education

5 Surprising Ways Cloud Computing Is Changing Education

Cloud Computing Education The benefits of cloud computing are being recognized in businesses and institutions across the board, with almost 90 percent of organizations currently using some kind of cloud-based application. The immediate benefits of cloud computing are obvious: cloud-based applications reduce infrastructure and IT costs, increase accessibility, enable collaboration, and allow organizations more flexibility…

Cloud Infographic – The Future (IoT)

Cloud Infographic – The Future (IoT)

The Future (IoT) By the year 2020, it is being predicted that 40 to 80 billion connected devices will be in use. The Internet of Things or IoT will transform your business and home in many truly unbelievable ways. The types of products and services that we can expect to see in the next decade…

Cloud Infographic – Guide To Small Business Cloud Computing

Cloud Infographic – Guide To Small Business Cloud Computing

Small Business Cloud Computing Trepidation is inherently attached to anything that involves change and especially if it involves new technologies. SMBs are incredibly vulnerable to this fear and rightfully so. The wrong security breach can incapacitate a small startup for good whereas larger enterprises can reboot their operations due to the financial stability of shareholders. Gordon Tan contributed an…

Is The Fintech Industry The Next Tech Bubble?

Is The Fintech Industry The Next Tech Bubble?

The Fintech Industry Banks offered a wide variety of services such as payments, money transfers, wealth management, selling insurance, etc. over the years. While banks have expanded the number of services they offer, their core still remains credit and interest. Many experts believe that since banks offered such a wide multitude of services, they have…