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Legal advice / Cloud licences

Users need a license to use software as a cloud service, or SaaS.

This is because this software ultimately also is copyright-protected. A SaaS license, however, will essentially differ from a traditional license.

In fact SaaS entails service provision rather than issuing licenses. Software is software, whether provided on a DVD or made available as an Internet service. Users are required to be assigned a right of use (a license) in order to work with the software. A number of additional provisions are required to be incorporated in a SaaS license which do not feature in traditional software licenses.

This is because SaaS is a type of continuous service. Offering SaaS or software in the cloud is a type of service. After all, the client is not provided with a product, such as software on a DVD, but can only do things using the tools that you make available. In respect of service provision, the law requires that you work as a “good contractor”. You must therefore make every effort to deliver on your promise and are liable if you fail to do so.

Since SaaS is a fledgling and virgin domain, it is difficult to determine exactly what your obligations are. Therefore it is important to ensure that you clearly communicate your responsibilities, and how far they extend in particular, to your clients. What is the expected availability, how are updates handled and how are errors resolved.

Moreover, a SaaS cloud service provider has greater access to what the client is doing. The service provider can view the client’s sensitive business information (or that of its purchasers). Such matters must be explicitly provided for. You should never assume that your clients have the same picture of the service provider as you.

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