Experienced SaaS Lawyer Attorney Andrew S. Bosin located in New Jersey with a Nationwide SaaS legal practice shares tips for successfully negotiating Software as a Service.
If you are a SaaS supplier, a distributor/reseller agreement will need to be put in place between your company and each distributor/reseller with certain language and additional clauses in addition to your standard SaaS terms and conditions especially if you are doing business outside of the country where your base of operations is located.
Applicable Law and Language
In the event your reseller is located in another country, your company should not agree to the contract being governed by local law and language. For example, if your reseller is located in France it will most likely desire the agreement being written in French and subject to French laws and jurisdiction in the event of litigation. This is because the local reseller will be selling your SaaS Software to its customers using its own local terms, conditions and contractual language. With that said, your company has no relationship with your reseller’s customers. So why should your company be contractually bound by local law and language? The simple answer is it should not.
You might consider as part of the negotiation between your company and the reseller to allow the reseller agreement to be translated into the reseller’s local language so each party has the agreement in their own language. It is important that the parties agree that the English version of the Agreement be the only version that is legally in effect in the event the parties have a disagreement about enforcement or interpretation of a term.
The reseller’s access to the SaaS Supplier’s software should be limited to the term of the SaaS Agreement. The software license should automatically terminate once the agreement expires or terminates.
In addition, if the customer is a company that does business all over the globe it is important to specifically identify which companies, entities or subsidiaries may have access to the software, in which parts of the globe and how many users will be accessing the software. Another thing to remember is to spell out the specific purposes for which the software may be accessed.
Intellectual Property Rights
It is critical that the SaaS supplier control the use of its name, trademarks and intellectual property rights by its resellers and that the SaaS Supplier must retain ownership in all of the IPR in the software and services it provides. The reseller agreement should spell out clearly if the reseller shall be permitted to register your company’s name, trademarks or local domain names on your company’s behalf for SaaS application and products. Certain countries in order for a SaaS supplier to do business in it may require a local company to perform such registrations.
If your company grants such rights to the reseller it is critical that you regulate what happens to ownership of trademarks and the use of your name at the expiration or termination of the SaaS Agreement.
In any event, the supplier should retain ownership of all intellectual property rights in the software and services it provides. Specifically, the agreement should say that the source code remains owed by the Supplier.
Return of Data
The customer’s data should be returned when the agreement ends. The format in which the data is to be returned and payment for this service should spelled out clearly in the agreement between the parties. In return for payment, the supplier can assist the customer in transferring its data to a new supplier.
Service Level Agreements
The Supplier provides hosting, maintenance and support services to the customer. The SLA should spell out the terms of this service. It’s a good idea to list where the data is being served from, i.e., what country and what security, backup and disaster recovery procedures are in place. It is also important to set forth support services and hours.
Territories and EU and Local Competition Law
You should specifically list the territories and/or countries in which the reseller may resell your SaaS application and products. And, you need to state in the Agreement if your reseller has exclusive or non-exclusive rights in each of the territories. If the reseller is granted exclusive rights make certain that your company retains the right to make passive sales to customers, if not, you will be in breach of EU competition law.
Lastly, certain countries have anti-competitive laws that automatically apply to the reseller agreement. If you fail to comply with these laws not only could the entire agreement become null and void your company will be subject to substantial fines.
Please call Andrew for a free initial legal consultation at 201-446-9643.
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Andrew is located in New Jersey just outside of New York City and has a nationwide Software Licensing and SaaS Law Firm representing college and university students in New Jersey, New York, Buffalo, Queens, Manhattan, New York City, Westchester County, Islip, Oyster Bay, Rochester, Utica, New Rochelle, Tonawanda, White Plains, Binghamton, Saratoga Springs, Rockland County, Brooklyn, Long Island, Albany, Syracuse, Suffolk County, Nassau County, Bronx, Staten Island, Allentown, Scranton, Lancaster, Harrisburg, State College, College Station, Boston, Hartford, Providence, Connecticut, Atlanta, Chicago, Washington D.C., Dallas, Florida, Ohio, California, Austin, Texas, Maryland, North Carolina, Massachusetts, Colorado, Utah, Oregon, San Antonio, Austin, San Diego, Los Angeles, Silicon Valley, San Francisco, Houston, Salt Lake City, Toledo, Akron, Dayton, Provo, Portland, San Jose, Miami, Tampa, St. Petersburg, Ft. Lauderdale, West Palm Beach, Broward County, Dade County, Newark, Delaware, College Park, MD, Cook County, Phoenix, Denver, Boulder, Ft. Collins, Nashville, Memphis, Kansas City, Raleigh, Charlotte, Indianapolis, Boise, Eugene, Manchester, Burlington, Philadelphia, Pittsburgh, Pennsylvania, Vermont, Rhode Island, Boca Raton, Arlington, Virginia, Alexandria, Virginia, Reston, McLean, Cambridge, Quincy, Riverside, San Bernadino, Minneapolis, St. Louis, Cleveland, Columbus, Baltimore, Sacramento, Cincinnati, Orlando, Las Vegas, Round Rock, San Marcos, Louisville, Richmond, Tempe, Southbend, Bloomington, Knoxville, Oxford, Tuscon, Long Beach, Ames, Ft. Collins, Lawrence, Blacksburg, Charlottesville, Champaign, Oklahoma City, Birmingham, Salt Lake City, Baltimore, Mobile, Alabama, Utah, Washington, Seattle, Oregon, Portland, Eugene, Sacramento, Pittsburgh, Wake County, King County, Redmond, Kirkland, Bellevue, San Mateo County, Contra Costa County, Cupertino, Los Gatos, Sunnyvale, Mecklenburg County, Jacksonville, Gainesville, Boynton Beach, Orange County, Palo Alto, Harris County, Waco, Columbia, Missouri, Tarrant County, Bucks County, Lehigh County, Bethlehem, Pennsylvania, Burlington, Portland, Maine, Manchester, Concord, Nashua, Cambridge, London, Paris, UK, England, Dublin, Scotland, Edinborough, Amsterdam, Germany, Munich, Berlin, Madrid, EU, European Union, Spain, Austria, Vienna, Geneva.