This question comes up regularly during SaaS contract and software EULA review or negotiations.
If you have a software product or a SaaS service, you should think about whether third parties (people you don’t have a contract with) can use or access your software, or whether it’s only accessible by your customer and their employees.
A recent court case addressed this issue. The court held that when the customer granted use to a third party, they violated the license agreement. And the third party was even using the software for the benefit of the customer. The court still said no way.
What can a software or SaaS company learn from this case?
1) Depends on Your Value Prop. Some software/SaaS companies really care whether a third party uses or accesses their technology, and others don’t.
For example, if you measure usage on the # of transactions, maybe you don’t care if a third party accesses your software (for your customer’s benefit) — they will just use more transactions under your customer’s account. But if you’re concerned the customer or third party may receive significant value you haven’t priced for, then you do care. Spell it out in your software EULA or SaaS contract.
2) How Do You Do It. If you plan to allow third parties to access or use your technology, state it specifically in your agreement. You could (a) allow that access and make your customer responsible for their actions, or (b) require the third party to sign a Use and Access Agreement with you and your customer (yes, three-party agreements exist).
If you plan to not allow this access, most agreements just state that the software/SaaS company reserves all rights not expressly granted. You could go further and specifically prohibit it. You can even split “Access” and “Use” rights — in the case above, “Access” was OK but “Use” was not.
Read your SaaS agreement or software EULA and see what it says.
For the foundational decision between an EULA structure and a SaaS subscription structure, see SaaS Agreement vs. Software EULA: Which Template Do You Need?
Legal Disclaimer:
This is for informational and educational purposes only, and does not constitute legal advice.