Negotiating Software as a Service Contracts - straffordpub.com

1 The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10. Presenting a live 90-minute webinar with interactive Q&A Negotiating Software as a Service Contracts Guidance for Corporate and Technology Counsel for Structuring Effective SaaS Agreements Today s faculty features: TUESDAY, SEPTEMBER 8, 2015 Kristie D. Prinz, The Prinz Law Office, Silicon Valley, Calif. Kelley C. Miller, Attorney, Reed Smith, Washington, 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Tips for Optimal Quality Sound Quality If you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection.

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3 35. FOR LIVE EVENT ONLY Program Materials If you have not printed the conference materials for this program, please complete the following steps: Click on the ^ symbol next to Conference Materials in the middle of the left-hand column on your screen. Click on the tab labeled Handouts that appears, and there you will see a PDF of the slides for today's program. Double click on the PDF and a separate page will open. Print the slides by clicking on the printer icon. FOR LIVE EVENT ONLY Negotiating Software as a Service (SaaS) Contracts : Guidance for Corporate Technology Counsel for Structuring Effective SaaS Agreements Strafford Publications Webinar September 8, 2015 Kelley C. Miller, Esq. Reed Smith LLP Agenda of Presentation Topics: Kelley Miller and Negotiating Key Provisions in SaaS Agreements and Overview of Cloud/SaaS of services Covered Under CSAs What is it?

4 Use of SaaS Data by Cloud Service Providers of Data to Data Security Legal Developments and Business Trends I. Pennies from Heaven : How Tax Authorities are Looking to Cloud Computing for Revenue Study in Cloud Taxation ( ): City of Chicago 6 Drafting Key Provisions in SaaS Agreements Drafting Key Provisions in SaaS Agreements: Introduction Cloud computing is an often ubiquitous term used to describe many different processes involving Internet-based transactions. Some of the conceptions of cloud are correct; others are very misleading Similarly, cloud computing agreements have as different iterations ( , Click Wrap, etc.) as definitions of cloud computing. The purpose of this presentation is to provide an overview of these agreements and the many legal and compliance issues that are inherent therein. Key to this part of our discussion will be an understanding of contract terms as related to cloud data; namely, how data is owned, accessed and secured in the cloud.

5 8 Drafting Key Provisions in SaaS Agreements: Overview of Cloud Computing The key distinction between the three main iterations of cloud computing services is whether the function/attribute is managed by the customer or the vendor. As a general matter, the further along the continuum of cloud products ( , Infrastructure), the more a function/attribute will be managed by the customer. In the most basic of cloud computing models Software as a Service all of the functions/attributes are managed by the vendor a fact magnified by the many issues with CSAs. 9 Drafting Key Provisions in SaaS Agreements: Overview of Cloud Computing Cloud Computing, Defined Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources ( , networks, servers, storage, applications, and services ) that can be rapidly provisioned and released with minimal management effort or Service provider interaction.

6 (NIST Definition) Essential Characteristics On-demand self- Service Broad network access Resource pooling Rapid elasticity Measured Service Service Models SaaS Software as a Service PaaS Platform as a Service IaaS - Infrastructure as a Service 10 Drafting Key Provisions in SaaS Agreements: Overview of Cloud Computing Software as a Service (SaaS), Defined The capability provided to the consumer is to use the provider s applications running on a cloud infrastructure. The applications are accessible from various client devices through either a thin client interface, such as a web browser ( , web-based email), or a program interface. The consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, storage, or even individual application capabilities, with the possible exception of limited user-specific application configuration settings.

7 (NIST) Essential Hallmarks of SaaS Use of Software that is hosted remotely by a vendor ( Service provider ); Software is accessible by the customer ( user ) using the Internet User s data is remotely stored and processed using the Service provider s Software there is no Software , storage or processing that occurs on the user s system 11 Drafting Key Provisions in SaaS Agreements: Examples of services Covered Under CSAs , Windows Azure (Runs apps; , app) , Rackspace (Public and private clouds; Servers) , Office 365 (Allows users access to One Note anywhere) 12 Drafting Key Provisions in SaaS Agreements: What are you getting? What are your risks? Flexibility Ability to forecast needs (scale) and plan for cost Not locked into current-generation paradigms Can change quickly and get a quick response where change warrants the need for the same Control Data and Access to Data are Key!

8 SECURITY Performance Reliability Vendor Lock-Ins BENEFITS RISKS 13 Drafting Key Provisions in SaaS Agreements: What are the most important factors effecting CSAs? (IT) 14 Drafting Key Provisions in SaaS Agreements: Why is it important to distinguish the CSA from other services Contracts ? Cloud services are not the same as Contracts for Software licensing only! Licensing, while a component of cloud services , is growing vastly more complex. Software licensing experts are not always on the same page as the business team executing the CSA. Accountability is Key! (1) Protect My Data! ; (2) Be Reliable (Uptimes and Contingency Planning) Not elements of licensing agreements, generally; and (3) Make It Right (When Something Goes ) CSAs = Marriage (Time + Cost) 15 Drafting Key Provisions in SaaS Agreements: Data What is it? Two Levels User/SaaS Customer + Customer Specific Considerations User/SaaS Service Customer Proprietary Data User/SaaS Service Customer PII Customer Data Customer PII Customer Locations and Preferences 16 Drafting Key Provisions in SaaS Agreements: Data CSPs Use of SaaS Data There are many ways in which a CSP may use SaaS data.

9 Monitor and administer the Service Respond to and resolve issues with the Service Complying data for analytical purposes of how efficiently the Software is running; use of this data for design new services aimed at customer or customer s market (anonymous as to customer/user-level identifiers; , no production data should be released that may expose customer-sensitive data). Common among SaaS CSAs is a tool that uses application data to provide customers with statistical analyses for their own use and planning Key, Take-Away: No customer IDs; no customer data or personal identifying information! 17 Drafting Key Provisions in SaaS Agreements: Data Who Owns It? Who Owns What in a SaaS Transaction? ( but important to specify in the CSA!) SaaS Service Provider SaaS Service Provider will own all aspects of the cloud Service configuration including User/SaaS Customer Any data provided by the User/Customer Other Parties (Hosts) May Own Components!

10 Example OWNERSHIP. Other than the rights and interests expressly set forth in this Agreement, and excluding Third Party and works derived from Third Party, you reserve all right, title and interest (including all intellectual property and proprietary rights) in and to Your Content. Think about what will happen to data upon termination of the 18 Drafting Key Provisions in SaaS Agreements: Data Access Service Level Agreement (SLA) SLAs will ideally contain specific parameters and minimum levels for each element of the Service provided. SLAs must be enforceable and state specific remedies that apply when they are not met. Relevant SLA-SaaS Functions: Response Time Error Correction Time Infrastructure/Security/Privacy Downtime Downtime Period Monthly Uptime Percentage Scheduled Downtime 19 Drafting Key Provisions in SaaS Agreements: Data How to Protect It It may be necessary to reconsider the premise that an individual has no reasonable expectation of privacy in information voluntarily disclosed to third parties.