Legal Issues to Consider when Offering SaaS or Licensed Software
While it may be hard to believe, there was a once a time in which a person who wanted a piece of software for his or her computer needed to physically go to the nearest computer store and purchase physical media in the form of floppy disks or CD-ROMs. The purchased software would then be installed locally on a computer’s hard drive, allowing the user to access it at any time, and any files generated would similarly be stored locally.
While this may seem anachronistic to our modern sensibilities, this was generally the case as recently as 15 years ago. While software can still be installed locally, more and more people are simply choosing to download their software through an Internet connection as opposed to purchasing physical media. As an extension of this trend, many software providers are now offering subscription access to software that is actually running on a remote computer that can be accessed remotely. This type of software is generally described as “Software as a Service,” or SaaS. It can be attractive to software developers as it allows for a subscription fee-based service, rather than the traditional model of providing updates to existing software that include enhanced functionality or other features.
While in both scenarios a software company is providing a consumer with usable software, there are significant differences in the legal relationship established between provider and user. Some of these are discussed below, and developers and providers seeking more information should contact an attorney today.
In the traditional software licensing model, the consumer does not actually purchase the software, but rather purchases a license to use the software he or she is using. As a result, the party that owns the copyright to the software retains the right to market and distribute the software. This type of license is the kind that should be used in any case in which the user is installing the software onto his or her computer, whether it is purchased as physical media or downloaded through the Internet.
Software as a Service
In the SaaS model, software providers generally should not license the software to the user, but rather should enter into a service contract. This is rather than providing a copy of the software for use, the SaaS provider is simply granting the user access to the software for a given period of time. Usually, the SaaS model also provides users with additional services as well, including support, data storage, and security.
Contact a Silicon Valley licensing attorney today to schedule a consultation
The provision of software through a traditional licensing model or as a service can raise complicated legal issues that must be approached significantly differently. In many cases, a particular software product may actually involve a hybrid incorporating aspects of both installed software and SaaS. For this reason, it is extremely important for software providers to have their license and service agreements drafted and reviewed by an attorney who is familiar with the products and services they offer. To schedule a consultation with California attorney Nate Kelly, call our office today at 415-336-3001 or 310-228-6215.