SaaS Agreement – Checklist

Q: How are SaaS agreements different from EULAs (a short checklist)…from the SaaS Provider’s Perspective?

Description of Service

  • SaaS Agreements should describe how your SaaS service works, and set the right expectations for its usage.
  • Usually no software runs locally (i.e. no software on the desktop), the end user has much less (no control) over the software.  That really is the nature of a SaaS business.
  • Plus keep in mind that each SaaS business is somewhat unique, as there is no one size fits all SaaS business. That is why your agreement should describe the key elements of your SaaS offering.

License Grant?

    • There is usually no license grant.
    • Typically term based (i.e. not perpetual).
    • You actually don’t need  a license, as the service is cloud based.
    • I have seen license grants in SaaS agreements, in in certain situations it makes sense (for example, if you are allowing the customer to download some copyrighted content from your service)

Hosting of Data

    • SaaS data is typically hosted by the SaaS provider and not the end user (at least most of the time).
    • SaaS providers use the customer data during the duration of the service, and make it available (or return it) to the customer at the end of the service. If it will be kept after the end of the service, then a fee is usually charged.

Warranty

    • The standard SaaS warranty is related to availability, as that is the usually the main customer concern (i.e. that the service will be up and running.).
    • The typical exceptions include: scheduled downtime, force majeure and customer technology issues.

Indemnity

    • Only an infringement indemnity (not a general indemnity) regarding your service.

Intellectual Property

    • All the IP is owned by the SaaS Provider, however the customer owns their data.
    • Usually an exception for aggregate and non-identifiable data, which the SaaS provider has the right to use during and after the service for any business purpose.

Limitation of Liability

    • No liability for lost profits, loss or destruction of data, and other indirect/consequential damages.
    • Other damages capped at the fees paid to the provider in the prior 12 months.

 

Takeaways:

  1. Make sure you work with someone who really understands the unique nature of your SaaS business so that they can help you can get your SAAS agreement right!
  2. Oh yea, SaaS agreements don’t have to be complex or long, as they can be simplified and drafted in plain English.
  3. Below are some blogs posts that may be helpful in learning more about SaaS Agreements. 

 

 

There is a lot to learn about SaaS agreements, so take a look at the home page for more information.

I have posts on issues like: Why you should register your copyrights; How to protect your source code; Channel agreement issues; Referral agreement issues; What are the hot SaaS privacy issues; What SaaS Trust Sites are and why they matter and What to do if your customer sends you their form agreement. So take a read and get educated!

 

 

 

 

SaaS Agreement – Checklist

Jeremy Aber October 19, 2011