I had just finished up my series entitled Looking for Sanity for Saas Contracts (parts 1, 2, 3, 4, and 5) when I received an issue of PLC Intellectual Property & Technology from Practical Law Company in the mail. Guess what’s on page 34? An detailed checklist for SaaS agreements that shows what the Client/Customer position should be and what the Vendor/Provider position should be. It’s a 5 page checklist.
Just some closing thoughts as I wind down this article.
I promised to give some practical advice about how to approach SaaS contracts. As you will probably find out, it’s just the same advice I would give about how to approach any contract that passes by your desk.
A few more thoughts:
Understand the Industry Standards
Know the industry standards. I already talked about limitation of liability and indemnity the last time around, but this applies to a lot of other terms too. The SaaS/cloud industry is not that difficult to understand. Want some easy advice? Log onto salesforce.com and read their master services agreement. That will give you an idea of what the rest of the industry is like.
I will be referring some to an article that showed up in the ACC Docket for December 2011 entitled “Legal Considerations in Migrating to the Cloud” by H. Ward Classen and Walter S. DelaCruz. I actually respect Mr. Classen’s work in software licensing as he literally wrote a book on the matter, but I have to say: I have problems with this article. It’s more balanced than the other stuff I’ve seen floating around (I won’t call out those attorneys), but I was expecting more of a middle ground consensus.
I’ve been doing a lot of negotiation around technology licensing, software development, software consulting, and other such agreements for some years. With the push for companies to embrace “cloud computing” and SaaS services, there has also been a proliferation of blog posts and articles written by so-called experts on the SaaS and cloud industries with a lot of strong cautionary language and telling executives and in-house counsel to be wary, seek maximum protection from your vendors, and negotiate without backing down.
I see a number of problems with this approach, and it’s gotten to the point where I felt the need to do a multi-part blog post about what I am seeing because I view the trends as disturbing. SaaS contract negotiations have become as hotly contested as enterprise software negotiations when they simply ought not be. So why have SaaS and cloud negotiations gotten uglier?