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Archive for 'Development Tips'

Drafting SaaS and Software Licenses Effectively Requires High Level Knowledge about the Technology

Written by on Tuesday, January 27th, 2015

There seems to be a common universal belief among many companies that there is a single form agreement circulating among software lawyers with the perfect terms that can just be cut and pasted into their agreements if they can just find the right attorney who can furnish that ‘perfect’ form agreement.  I have lost count of the number of times I have been told by clients that they don’t need anything from me other to provide said ‘perfect’ template.  A few have even equated my or another attorney’s ability to provide them with the ‘perfect’ form template to the level of expertise of the attorney.

The reality, of course, is that merely cutting and pasting from a form agreement–even a very well-written form agreement–is precisely the wrong way to draft this type of agreement.   In fact, I would take this one step further and take the position that it is precisely the wrong way to draft all technology agreements.   Furthermore, it is my opinion that an attorney’s willingness to provide any document purported to be a ‘perfect’ software template is likely to be inversely correlated to his or her level of drafting experience in the space.  I certainly was far more comfortable with the idea of furnishing a template in response to a client request of that nature as a very junior and inexperienced  attorney than I am today, when I know better.   I’ve seen all too well how companies may take the ‘perfect’ template provided and rely on it for years and years without understanding that the form required many long hours of attorney customizations and revisions before it was ever put into use for their business.

While there absolutely are standard terms that you will find in all software agreements–whether SaaS or software licenses–which may form the basis of high quality software template for either the software license or SaaS model, a well-drafted contract is more than just an assortment of the “right” terms, it reflects the actual product offering to customers.  Thus, the drafter needs to not only know and understand how to draft these contracts but also have a very high level understanding of what the product offering to customers is.  Otherwise, the contract will be of a very poor quality, regardless of how good the lawyer was that put the original form agreement together that the contract may be based upon.

For example, in the enterprise license model, a company may purchase a license allowing a set number of user rights.  In such a model, a well-drafted license would at least explain what constitutes a user, how users can be added and deleted, what rights the users have to the various license grants made (which should go beyond the simple ‘use of the software’), the cost of purchasing new users, and the cost of purchasing the initial set of users.  But the decisions on how to structure each of these terms would be entirely dependent on the business model and product offering made available by the specific software company.  Thus, if the terms selected  are being cut and pasted from an unrelated form agreement, it is almost certain that the terms chosen will be wrong and make no sense.

The same problem occurs with the cutting and pasting of SaaS agreements.  In the enterprise model, again, you may similarly have users with different access rights, which are the SaaS equivalent to a license.  Your enterprise customer may want to start with 100 users and anticipate needing to add 100 more in a period of months.  Your enterprise customer may also anticipate losing some users and want to get some sort of credit for the users lost.  You may have different pricing based on when the timing of the purchase of new users.  Given all these different drafting and business model choices that can be made, if the terms selected are simply being cut and pasted from an unrelated form agreement, again, it is almost certain that the resulting agreement simply will make no sense.

The structural choices in how you draft these kinds of agreements do not end with the user rights.  For example, there are choices that the drafter has to make based on what type of data is being collected by the product, where the data is being stored, the level of risk to the company if the data is accessed by a third party, and what needs to happen to the data at the end of the relationship.  Also, there are choices that need to be made based on whether use of the product depends on importing pre-existing data into the software and effectively reading such data.  It is not uncommon for enterprise customers to have much higher requirements with respect to data than a small business client would generally have.  Fees, technical support, and training are other common areas of significant variation from product to product.

The bottom line is that a well-crafted software license or SaaS agreement will be structured around the technology, features, functionality, and business model of the applicable product and will not be based merely on a set of “perfect” terms from any template.  As a software company, that means that if you retain an attorney to advise you on your contracts, your attorney should absolutely be pushing you to provide significant details about how the technology, features, functionality, and business model of your product work, among other issues.  If you are not getting those kinds of questions from your lawyer, then it is highly likely that the terms of any contracts that your attorney reviews or drafts for you will reflect a similarly low level of understanding about those same concepts.

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Report Reveals that the Majority of Apps on Market Ignore Privacy Concerns

Written by on Sunday, September 14th, 2014

The Wall Street Journal reported this week that apps on the market overall are not providing users with even basic privacy protections.

The report focused on research conducted by the Global Privacy Enforcement Network, which is a coalition of privacy officials from 19 countries, including the U.S. Federal Trade Commission, and determined that 60% of the 1211 different apps reviewed raised privacy concerns, as they did not disclose how they used personal information, they required that the user give up significant personal data in order to download the app, and their privacy policies were posted in font too small to be read on a smartphone screen.   In addition, they found that 30% of the apps provided no privacy information whatsoever, and 31% requested access to person data without advising users whether or not the personal data was necessary for the app to function. Just short of half of the apps had privacy policies that were not smartphone-friendly in terms of their readability.

If you are a developer with an app you have released on the market and you fall into the category of developers who are ignoring privacy concerns and want to change your ways, adopting a few practices would obviously address this organization’s concerns: start disclosing how you use personal information, refrain from requiring the disclosure or consent to use of personal data before a user can download your app; and make your privacy policy readable on mobile devices.  In addition, you may want to consult the digital guide published by California’s Office of Privacy Protection for additional recommendations on best privacy practices.


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Equity Not the Only Option for Software Start-Ups Hiring First Developer

Written by on Saturday, July 23rd, 2011

Silicon Valley entrepreneurs have a tendency to want to offer equity to anyone who they hire when they are first getting off the ground, and some developers prefer to receive equity in the business over an IOU that they may or may not be able to collect on.

However, when an entrepreneur calls me saying that he or she wants to offer equity to a developer he or she barely knows but wants to bring on board for the project, I always suggest that he or she consider another option: a collaboration relationship.

In my recent posting to the Silicon Valley IP Licensing Law Blog, I explained why collaboration agreements should be contemplated by many software start-ups hiring their first developer.

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Copyright Assignments are Commonly Overlooked Requirement of Most Development Projects

Written by on Saturday, July 23rd, 2011

Disputes over development projects are extremely common in even the best of economies, but are particularly common in today’s world, where most companies are on a tight budget and developers are always on the lookout for better paying opportunities.

In fact, development disputes are becoming so widespread that I receive calls now almost daily about yet another web or software develpment dispute. Surprisingly, in almost every case, the purchaser of the development work has overlooked a critical aspect of the project: the purchaser has neglected to request an assignment of the copyright for the work developed.

My recent post on the Silicon Valley IP Licensing Law Blog explored why you should require a copyright assignment agreement before you start a development project. Requiring a copyright assignment when you start the development project ensures that you will obtain the rights to the work you are paying for when the project is completed. Otherwise, the chances are high that the developer will terminate your license to use the work as soon as a dispute arises, and you will lose not only the cash you invested in the project but also your rights to use the work.

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