SaaS Agreements 101: Data Ownership, Usage Rights, and GDPR (Part 6 of 6)
By Joanne Hue, published: 2023-03-25
A SaaS agreement is a contract that is legally binding for a company that provides software as a service and its client. These services primarily concern cloud-based applications that a client may subscribe to. After the subscription, the client can access these internet-based services in exchange for a recurring fee.
While accessing the services of the SaaS vendors, customers collect their data in the cloud server of the vendor. Usually, they maintain ownership of their data. Data is a valuable resource and customers should adopt caution to the best of their ability to secure the privacy of their data. The SaaS agreement outlines all the rights concerning data ownership, usage and data privacy. A well-drafted agreement can prevent the unauthorized usage of customer data. If you’re looking for templates to draft an efficient SaaS agreement for your business, you can create SaaS agreements through Zegal’s templates.
Data Ownership in Saas Agreements
The laws and practices concerning data ownership in SaaS agreements are not objects. Usually, customers and providers reach an agreement for the ownership of data. Generally, it is regarded that the party that creates the data holds ownership over the data. In most cases, a customer may create or gather data that is stored in a cloud. The customers maintain ownership over that data while it is controlled by the producer. Service Level Agreements or SLAs are significant to the customer’s ability to retrieve data from the vendor. Therefore, stakeholders should carefully review a Saas SLA prior to signing it. In most cases, SaaS producers permit the users to export and back up their data. The agreements also outline the procedure for customers to retrieve their data if the vendor goes out of business through bankruptcy. Customers need to be cautious about the protection of their data and should negotiate the terms of the SaaS agreement to allow more security for their information.
The Value of Your Data
Data in SaaS apps serve as historical records of a company’s operations. In addition to being crucial for compliance, historical data offers clients the potential to enhance many aspects of their businesses, including marketing, sales, finance, operations, and product development. Customers can keep track of cause and effect by tracking changes. They also gain a competitive advantage from doing so. Having a larger data set is advantageous for pattern detection. With the rise of machine learning, data can be used to predict market behaviour with great accuracy. The majority of the time, new privacy laws give authority back to consumers. You have the option to refuse all cookie tracking and other nebulous ways that your data may be gathered and used.
In almost all situations, if you use a SaaS, the data that is present in the SaaS cloud belongs to you. However, customers should read all the provisions of the SaaS agreement prior to signing them. They have to employ caution so as to not sign their ownership away. Customers should keep an eye out for clauses addressing security, local backups, retention guidelines, and termination. When the SaaS agreement with a vendor terminates, customers should make sure they are still able to retract their data and transit to the next vendor.
If you’re a SaaS provider, you should be aware that your software adds great value to users’ data. However, claiming ownership over that data opens space for the customer to pursue a legal suit against you. It is recommended to avoid last-minute development projects, and consider GDPR or CCPA as foundational tools for writing your SLAs.
A SaaS agreement needs to specify the number of users that hold the right to access the application after the agreement. Usually, companies require multiple employees to use the same tool to complete a task. They need to subscribe to a suitable plan that is fitting for the requirements of the company. If the number of users increases or decreases, the parties benefit from amending the provisions of their arrangement in the SaaS agreement. Companies may also agree upon providing usage rights to unlimited devices that run under the same licence.
The SaaS agreement governs, the customer’s rights to use the services and sets limitations on that usage.
In SaaS agreements, data management and security are of significant interest. Instead of being locally stored on the client’s personal computer, the SaaS provider’s server hosts the program. Therefore, they control the sensitive data of the customer. This is the reason why the majority of SaaS contracts have a section concerning the management of data privacy.
Saas agreements must have specific Data Privacy provisions as many software service-providing companies use customer data that may be highly sensitive to aid their growth. The provider’s duties and requirements in regard to data collecting and their ways of protecting the data of their clients are covered by data privacy terms. Current trends show that SaaS vendors are failing to or avoid making their customers aware of their rights concerning the confidentiality of their data. In this context, choosing the right provider by evaluating risks should become a common practice for a Customer. Likewise, SaaS agreements should focus on improving the transparency of the transaction. Before signing up for Cloud computing services, companies and individuals should assess the extent of the confidentiality of their data.
SaaS agreement distributes usage rights of the application owned by the SaaS vendor. As SaaS services are not installed in a user’s computer and operate from a cloud service provider, the owner of the cloud gets access to the data of the user. This data, while largely controlled by the cloud, still belongs to the customer. Data ownership can be an inconsistent part of SaaS agreements and it addresses the conflict of interest between the parties. Since data is highly valuable, customers should protect their data security. They can do so in the SaaS agreement by increasing liabilities for the misuse of customer data.
You may also like:
- SaaS Agreements 101: Subscribers and Providers Rights & Responsibilities (Part 1)
- SaaS Agreements 101: Payment, Renewal, and Termination Terms (Part 2)
- SaaS Agreements 101: Service, Warranties, and SLAs (Part 3 of 6)
- SaaS Agreements 101: Managing Risk with Liability Indemnification Clauses (Part 4)
- SaaS Agreements 101: IP Rights & License Provisions in SaaS (Part 5)
- SaaS Agreement Template
- Service Agreement Template
- White Label Solution Agreement Template