Can a Third-Party Access or Use Your Software?

Can a Third-Party Access or Use Your Software?

This question may come from time to time as part of your SAAS contact or software EULA review or negotiations, so as a software lawyer I thought I would address it. Here goes.

If you have a software product or a SAAS service you should think about whether third-parties (you know people like in the picture to the left) you don’t have a contract with can use or access your software, or is it only accessible by your customer (and their employees of course).

A recently reported court case addressed this issue, so I thought I would share the result and provide some takeaways. Without going into the details of the case —which I know you really would like to skip–the court held that when the customer granted use to a third-party they violated the license agreement. Oh and by the way, the third-party was even using the software for the benefit of the customer, and the court even said no way.

So what can a software or SAAS company learn from this case?

1) Depends on the Your Value Prop. Some software or SAAS companies really care whether a third-party uses or accesses their technology, and others really don’t.

– For example, if you measure usage on say the # of transactions, maybe you don’t care if a third-party accesses your software (for the benefit of your customer) as they will use more transactions under your customer’s account, but if you are concerned that if a customer (or the third party) may receive significant value which you have not taken into account when pricing your technology, then maybe you do care about that third-party access and use. So figure it out and tell your customers/spell it out in your software EULA or SAAS contract as these are the kind of things they need to know.

2) How Do You Do It. If you plan to allow third-parties to access or use your technology, then state that specifically in your agreement. As these third-parties by their nature do not have a contract with you regarding the use of the software, you could (a) allow that access and use and make your customer responsible for their actions (and omissions) or (b) require that the third-party sign some kind of Use and Access Agreement with you and your customer (yes, a three party agreement…they do exist). If you plan to not allow this access or use, then most agreements do not address the issue of allowing this access (they often state that the software or SAAS company reserves all rights not expressly granted…and this right is not a right expressly granted). You could even go further and specifically prohibit it (maybe in the confidentiality section or somewhere else). By the way, you can even split ‘Access’ and ‘Use’ rights, so you may allow a third-party to ‘Access’ (i.e. view only) your software but not ‘Use’ it. In fact in this particular case (the one mentioned above) ‘Access’ was ok, but ‘Use’ was not.

Just a few thoughts when drafting your saas contract or software EULA, as you should figure this out before your customer has to (or does). Take a read of your software EULAR or SAAS agreement and see what is says about this!

Legal Disclaimer:  This is for informational and educational purposes only, and does not constitute legal advice. Contact your attorney for legal advice, which should be provided after review of the facts and applicable law.

 

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