2 Takeways From the CarrierIQ Situation, from a SaaS Attorney

Ok this CarrierIQ situation is really crazy, but there are some things (from a SaaS Attorney’s perspective) that every software or SaaS company should think about.

1) Who is really at fault here: CarrierIQ or the carriers?

• While this is a complex question (and as of today all of the facts are not known) what we do know is Carrier IQ is the software provider and the carriers have licensed their software for use on mobile devices for sale to consumers.
• Two key issues are what type of monitoring the carriers were performing on the phones, and was it disclosed.
• Seems to me, that what was being monitored and if there is an issue of ‘not disclosing’ something, really falls on the carrier’s shoulders. The carriers are the ones that determine what information to collect, transmit, etc., and also are the ones with the obligation to disclose these type of activities to their customers.
• Oh, I am not simply making this up, as Tech Crunch (‘Don’t Blame the CarrierIQ’) and CBS News (‘Carrier IQ wrongly accused of keylogging?’) seem to be taking this view too.

2) What does the indemnity say between CarrierIQ and the carriers?

• Ok I know indemnities are something that makes most people’s eyes glaze over, but this is important, so stay with me. Most software or SaaS providers should only be providing infringement indemnities, and not a typical general indemnity (here is some background on this issue from my blog).
• Why you say?  Well, this CarrierIQ situation should make you think about indemnities, as if CarrierIQ signed an indemnity (which is in essence an insurance policy) in which they indemnified the carrier regarding ‘their use of the software,‘ ‘arising out of CarrierIQ’s performance,‘ etc then CarrierIQ has a huge problem. CarrierIQ could be on the hook for millions of dollars in legal fees and fines/judgments/settlement amounts, when (based on what we know as of now) they may not be the ones that really caused this situation.
• What I am trying to say here, is if you are a tech company think really hard about indemnities, as in situations like this they can really become a big/huge/ bet the company legal issue for you.

You think this is not serious business, well read the top of a recent complaint filed in court on Dec 2nd.

So we will see how this plays out, but at least I am looking out for you and thinking about some good things to learn from this mess.

Disclaimer:

This post is for informational and educational purposes only, and is not legal advice. You should hire an attorney if you need legal advice, which should be provided only after review of all relevant facts and applicable law.