Why Not Use “License” Agreements for Software-as-a-Service (SaaS) Deals?
Many software-as-a-service (SaaS) contracts grant a “license” to the vendor’s software. That’s a mistake. Licenses authorize making copies of on-premise software. Customers don’t copy SaaS, so they don’t need a license. And if you’re the vendor, a license can hurt you. [I’ll explain below – but for a deeper dive, please join us for the […]
3rd Edition on Sale — The Tech Contracts Handbook!
I’m excited to announce the third edition of my book, THE TECH CONTRACTS HANDBOOK. You can buy a paperback or e-book from Amazon and other retailers or direct from ABA Publishing. It’s for both lawyers and businesspeople, including contract managers and procurement staff. (It’s selling fast, but don’t worry if Amazon says “out of stock.” […]
Don’t Cross the (Payment) Streams
“Don’t cross the streams,” says Egon in Ghostbusters (the 1984 original). “It would be bad.” Why? “Try to imagine all life as you know it stopping instantaneously and every molecule in your body exploding at the speed of light.” You could face less extreme consequences if you cross the payment streams in a contract, but […]
IP Indemnity Exception: “Registered after the Effective Date”
Some intellectual property indemnities exclude claims about IP registered after the contract’s effective date. The tech provider argues that it shouldn’t be responsible for IP it didn’t know about when it created its product — or at least when it signed the contract. “If we couldn’t have known about that IP, it’s not our fault […]
Don’t grant or receive licenses to “use” software
Here’s a typical grant of rights from a software end-user license agreement (EULA): Provider hereby grants Customer a license to use 30 copies of the Software. Common though that clause may be, it’s dysfunctional. On-premise software licenses grant rights under copyright. And the copyright statute does not address a right to use anything. U.S. copyright […]
Limits of Liability Don’t Work for Indemnities
Contracting parties often debate whether the limit of liability should apply to indemnities. But few notice the problem. Even if the contract specifically says the limit applies to an indemnity … it doesn’t. The indemnity obligation remains unlimited. I’m serious. An Indemnity Is Just Another Obligation to Perform (in IT Contracts) Contrary to common belief, […]
New SaaS Agreement Sample Form
Today, we updated one of Tech Contract Academy’s key sample contract forms: the Hybrid Cloud Agreement with Professional Services. It’s available to you, along with the rest of our forms, at the Contracts Page. This is the first update based on best practices and changes featured in the third edition of David Tollen’s book, The […]
Cloud Services Are Neither Products nor Services
Contract drafters regularly confuse cloud services with traditional products and services. They approach software-as-a-service (aka SaaS) and other cloud services as if they were either software products or old-style services, like professional services. That leads to perplexing negotiations and contracts full of errors. Much of the trouble stems from the IT industry’s vocabulary. In the […]
Interview at ColinSLevy.com
Colin Levy just posted an interview with our founder, David Tollen. Colin is corporate counsel at Salary.com, and he runs a great blog about legal innovation and legal technology, at ColinSLevy.com. Please click here to read the interview!
Don’t Use License Agreements for Software-as-a-Service
Many software-as-a-service (SaaS) contracts grant a “license” to use the vendor’s software. That’s a mistake. Licenses authorize making copies of on-premise software. SaaS isn’t copied, so it doesn’t need a license. And if you’re the vendor, a license can hurt you. SaaS Customers Don’t Copy Software The confusion stems from the role of “software” in […]