2015

I have always thought that disclaimers were good things to add to SaaS agreements, but this very recent case demonstrates that they really can make a difference in a legal dispute.

By the way, a disclaimer is a statement regarding things you are not liable for.

Example, if you provide a medical software service, it is a good idea to state that you are not providing medical advice, and that the doctors are solely responsible for providing medical advice. You get the picture.

So in this case, a building material company was certifying contractors as Master Craftsman regarding their products. The good news is if a customer wanted to search for a Master Craftsman on the building company’s site they had to agree to the building company’s Terms of Service which stated that:

“Although we take certain steps to examine the credentials of our listed service professionals, CertainTeed makes no guarantees or representations regarding the skills or representations of such service professional or the quality of  the job that he or she may perform for you if you elect  to retain their services. CertainTeed does not endorse or recommend the services of any particular service professional.”

So despite that warning, a customer sued (yep, can you believe it) the building company for fraud (and some other things). The good news is the court got it right, and threw the case out  (aka dismissed the case early) as there was no misrepresentation (= no fraud).

So …

 

Let met explain. Some SaaS companies add all kinds of things into their SaaS agreements, and when you are finished reading the agreement you understand everything possible about their offering. While this kind of makes sense at first blush, when you unpack this a little and deal with these types of agreements on a regular basis (which I do), you will soon see that this is not that efficient or effective.

The core problem here is that SaaS is not static and it morphs and changes more often than on-premise software. As many of you know most SaaS companies employ the Agile methodology or manifesto, which is all about rapid release cycles. This means that the customer has no choice but to accept the changes to the underlying software (in fact, this is one of the main benefits to SaaS). Q: So how should SaaS agreements accommodate this difference? A: Well often they don’t and that is the problem. So the trick is to find the right balance of what terms need and must be in the SaaS agreement, and what issues can be better addressed in an online FAQ or online policy.

There are core legal concepts that must be addressed in the agreement (limitations of liability, warranties, disclaimers, etc), but if you think about it there are other concepts that are more descriptive of how the thing works. These type of issues are great candidates for an FAQ. I even wrote a blog post about it.

Here …

Software developers are really smart (I know, as I work with lots of them on their software development agreements, etc.), but there is one blind spot that I see way too often: they trust their customers too much, and then they take things into their own hands when they don’t get paid. Hey, getting frustrated (even angry)  is only natural when someone does not pay what they owe, but not handling it the right way is not. So don’t shut down a customer’s site (software, product, etc.) for a billing dispute, unless you have the legal right to do that.

So here is the hypothetical.

• A customer hires a software developer to build a website, and then the customer does not pay on time and the software developer ‘remotely’ shuts down the site (so that the customer will be forced to pay). The customer then sustains a financial loss (e.g. lost business).
• Under the law, terminating access or repossessing something is a called a ‘self help remedy,’ and is an area of the law you want to be very careful with.
• It is similar to when you do not pay your car note, and then the bank repossesses your car.
  • However, in this car example, there are rules as the bank cannot ‘break the peace’ (i.e. they can get the car if it is on the street, but not if it is in a locked garage).

Q&A

Q: What is the right way to …

The Network Advertising Initiative (NAI) has some very useful info in their 2015 Code of Conduct, that you should be aware of  regarding SaaS privacy if you are in the online third party ad business. The NAI is a self regulatory governing body of third parties in the online advertising ecosystem. This group may be useful group not only for ad networks, but for anyone dealing in third party ads (for example, platforms, aggregators, yield optimization firms, etc).

The most interesting issue to me after reading their Code of Conduct is in their definitions.

See below.

• Personally Identifiable Information (PII) means data used to identify an individual.
• Non–PII data that is not linkable to an individual, but is linkable to a device.
• De-Identified Data is data that is not linkable to an individual or device.

So what I found fascinating is that these definitions do not only focus only on identifying a person (which is how the world use to work), but now it is all about identifying a computer or device, or person. So before we all thought that if you don’t or can’t identify a person with your information then it was not a big deal, but now you have to be more careful if you are tracking or identifying a computer or device, especially across platforms. What is even more interesting, is that I am also hearing that the Federal Trade Commission (aka FTC) is very interested tracking devices and computers, as …

While there are several ways to legally protect your SaaS software, copyright law is the most popular and maybe the easiest way to protect it. Every SaaS executive needs to know a few things about SaaS software and copyright law, so take a quick read of the following.

Can you obtain copyright protection for your GUI? 

• This is an important issue, and one that many vendors do not understand. As a general matter, obtaining copyright protection for source code is easy, but obtaining protection for GUIs is not that simple. Here is a great blog post on the ins and out of it. http://bit.ly/1HfQ1f9

What is the difference between Contract and Copyright Protection for Software?

• Contracts and Copyright are two totally different ways to legally protect your software. This post contains an explanation of the difference, and why you should use both methods to protect your software. http://bit.ly/1HfQcXZ

What is Fair Use?

• Fair use is a very important defense to copyright infringement (to prove that you are not infringing on someone’s copyright), and is a concept that is rarely understood. It in essence is a 4 part balancing of interests test. Keep in mind though that it can be subjective, so relying on it is not always the best way to go. http://bit.ly/1HfQj5I

Protecting your software really matters, as (sadly) I am starting to see a lot of copycat software programs out there. Remember that if you don’t take steps to protect your software today, it may leave your software …

 

 

 

 

 

A while back I wrote a blog post about Trust Sites, and why, if you are a SaaS company, you should have one (outside of your SaaS agreement). Well, since them a lot has happened so I wanted to provide you with an update.

What is New

1). Salesforce.com has updated their Trust Site.

– Take a look at their new site. https://trust.salesforce.com/

– They have taken it to a new level with a cleaner and simpler layout, with Trust, Status, Performance, Security and Learn links.

– This is the new gold standard.

2). There are lots of third party services that can setup a trust site for your SaaS application (for a very reasonable monthly fee).

– One of my clients told me about this company, and I really like it. https://www.statuspage.io/ For around $99 a month you can create your own simple trust site using their service.

– There are lots more, so take a look at these too:  http://www.statuscast.com/ and  https://status.io/. I am sure there are more too.

So Remember This.

– When you are selling SaaS, you are selling trust! In the old days, what closed the deal was whether or not the customer liked your salesperson (at least that is what salespeople tell me), but in this new world of remote selling (over the wires) it is all about trust.

– Design your own trust site, based on what your customer needs and wants to know about your …