Situation – your team develops a SaaS service, you even sell it, and before selling it, it would not hurt to draw up a user agreement, to understand what SaaS means from a legal and contractual point of view. You sit down together with lawyers, partners and colleagues, and then a complete fog begins, which I will try to disperse today together with respected market experts.

SaaS top view

The time for SaaS in legislation has not yet arrived, and so far, all lawmaking, unfortunately, does not play in the field of clouds, but beats them. On a positive note, a landmark event for the cloud segment of the IT industry took place a few weeks ago – a council was created under the Ministry of Telecom and Mass Communications of the Russian Federation, the purpose of which is to regulate legislatively cloud market initiatives, incl. The council includes several independent members of the RCCPA – and this inspires hope for the rapid development of cloud standards and the creation of a legal framework for *aaS.

So far, in cloud computing, businesses as a whole are guided by NIST standards and their experience. Experience is rather the use of existing practices and their adaptation to the cloud format. An example – the implementation of the user agreement in classic and cloud hosting is very similar and by and large it makes no difference for the client which services to consume “hardware” or cloud, but there are, as they say, nuances that, I hope, regulate the above advice.

The best example of nuance and service seems to be there, but no one knows where it is.

SaaS – legal constructions, as a consequence of business views

Option A of SaaS is Licenses.

SaaS is developed by companies that have historically come out of “boxed” software and most of them operate with the concepts of “License for the right to use software” in their work, and hence the whole game in contracting is based on software licensing, transfer of rights with amendments to the Tax Code – benefits for exemption from VAT, transfer of rights by partners and its replication. What we see in this approach thesis:

– When selling a service, the rights to the software are transferred and the service is not available – I do not provide services for accessing the software.

– There is no need for licensing activities – telematic services … and why do I need it?

– In the case of working with partners, I give a license, on the basis of the license, the partner creates a service, adds VAT / or the partner transfers the right to the client to the software without VAT / or the partner is an agent who receives remuneration for the resale of either the software or services (as agreed and clause beautiful freedom of choice of options for the use of intellectual property rights).

– In the SLA, you can take out everything related to access to the service, its performance and data safety, but still the key word in this scheme is License with all the consequences. SLA can be partner. An example is the placement of software in a TIER 3 certified data center. I transfer part of the responsibility (access, data safety, backups) to the partner and this is its value.

— 2 agreements with the client — Licensing and Technical support (SLA).

– No VAT.

— The offer is questionable.

A thin place is the question of working with software / delivering software to the user. On the one hand, I don’t care what means and how the user works with the application (provider, browser, client) and it’s up to me to transfer the right, on the other hand, I perfectly understand that all calculations are performed on my servers (partner servers) and I must be more responsible for work processes and delivery of application results to users.

Option B SaaS is a hardware-software complex that guarantees the service’s operability, its availability and data safety. In fact, the developer company with this approach turns into a service provider from its public or partner cloud. Here it is:

– Provides a service.

– There is VAT.

– The concept of a license is leveled. Although everything should be built around it (see expert comments).

— There is a need to obtain a license for telematics.

– In the case of working with partners, there is only an agency scheme.

– Perhaps there are direct obligations for the safety of data.

— The user agreement includes SLA explicitly.

— Work with the offer is even more doubtful.

Yes, in practice, developers and even cloud service stores use both schemes. Quickme and I love the first one and it works great and I pass the floor to the highly respected experts.

Expert opinions

It must be admitted that just a few years ago, the words of Saas sounded terrifying to lawyers. Disputes about the legal nature of the contract for Saas have not subsided even now.

This is largely due to the lack of legislative regulation and judicial practice.

In my opinion, the license agreement is the most correct from the point of view of the law. it is this design that is provided for the transfer of rights to an object of intellectual property.

At the same time, if related services make up a significant share, that is, draw up a separate contract for services. It is not true to reduce the entire structure only to the provision of services. the basis of everything is the use of software (albeit in such an unusual way).

In judicial practice, the issue of legal nature was not raised. I know of only one court decision that indirectly refers to the provision of software based on Saas (in conjunction with a large number of other stand-alone services). There, the court indicates that these relations are the provision of services. But such a single decision cannot yet be taken as a basis for action.