Software as a Service Agreement

A Software as a Service Agreement, or SaaS, as it is often called, is a document through which an owner of software provides clients or customers with access to the software. It is used for cloud based software, where the software is stored on servers controlled by the software provider and the user is just given access to it. This is different from software which is downloaded by a user - for which an End User Licence Agreement may be more suitable.

As the name suggests, the document is for use when software is being used as a service (rather than a product). So instead of downloading a copy of the software, the user is being given access to it. Some common SaaS platforms include Gmail, Slack and Xero.

The SaaS Agreement sets out the terms on which the user gets access to the software. The software doesn't have to be a large, complex program; it can be any piece of software which is provided for the public.

The SaaS Agreement on any website or mobile app creates a legally binding set of rules for the user regarding how the software can be used and shared (if applicable). A well-written SaaS will also cover items that are absolutely not permitted regarding the software, such as reverse assembly (ie. analysing the software to try to replicate the code) or security breaches.

If the owner is making software available on a website or mobile application, then the owner is also likely to require other documents for the website or application. For example, the owner may require a set of Terms and Conditions for Website or Mobile Application, which set out rules for users of a website or mobile application. They may also require a Privacy Policy for Website or Mobile Application. If the owner is also offering services (for example, custom built software or software maintenance services), then a Service Agreement may also be required.

What's the difference between a SaaS, an EULA, an Intellectual Property Licence Agreement, and an Intellectual Property Assignment Agreement?

These four documents have a few things in common, so many users get confused between them and don't know which one to use. Each document is tailored to a different situation, so it is important to understand how they work and to choose the appropriate document.

As mentioned above, a SaaS is used for cloud based software, where the software provider keeps the software on their own server. Users are given access to the software, and can use it for as long as they hold a valid subscription. For example, if you register for a Gmail account, then you get access to the platform, but the software is actually stored on Google's servers. You just provide your login details when you want to access it. If Google updates the software, then the next time you log in, you will notice the changes. A SaaS is often used as a standard form contract online (for example, in conjuction with an "I agree" checkbox).

An EULA, or End User Licence Agreement, is similar to a SaaS, but it is for use when the user actually downloads the software. For example, if you download and use Microsoft Windows, then you have probably agreed to Microsoft's EULA.

An Intellectual Property Licence Agreement is similar to an EULA, but it is more general in nature. It may be used for other kinds of intellectual property aside from software (such as a brand name, an image, or a song). It also may not contain some of the software-specific terms that an EULA contains. Compared to an EULA, it is more common for an Intellectual Property Licence Agreement to be negotiated between two parties (rather than published online and entered via an "I agree" checkbox). However, just like an EULA, this kind of agreement just provides a licence to use the intellectual property. The owner of the intellectual property retains ownership of it at all times.

An Intellectual Property Assignment Agreement is somewhat similar to an Intellectual Property Licence Agreement, except for one major difference - the fact that it transfers ownership of the intellectual property. So, for example, if someone is being given the right to use a song in their TV commercial, but the songwriter is retaining ownership of the song, then they may want to use an Intellectual Property Licence Agreement. On the other hand, if the songwriter is giving up their rights in the song altogether (for example, because they were hired by a production company to write the song, and the production company intends to own the song) then they ay use an Intellectual Property Assignment Agreement.

We have copies of all of these documents available so take some time to consider which is the most appropriate.

How to use this document

This SaaS Agreement will allow entry of details about the software and the terms on which it is being provided to the user.

The document has the option to enter the user's details, which can be popular with software providers that provide complex software and negotiate each contract directly with each individual user. Alternatively, the document has the option to be finalised without entering the client's details, which is a popular option when software providers want their agreement to be available online and accepted by users via a checkbox.

In order for the SaaS to be legally binding on a user of the software, the user will have to actually be aware of the terms of the SaaS, and will have to agree to them. So firstly, the SaaS will need to be presented to the user (often this is done by publishing it on the website or application where the software was accessed).

Some owners simply make the SaaS available somewhere on the website or application where the software is accessed (usually on a separate page, accessible via a hyperlink) and claim that by downloading or using the software, users agree to the SaaS. This is known as a "browsewrap" agreement. However, in these circumstances, if there is a dispute, it may be possible for a user to argue that they never actually saw the SaaS and therefore they never actually agreed to it. In some cases, the user might be able to argue that they are not bound by the SaaS, which can be a big problem for the owner.

Therefore many other owners make the user take positive steps to confirm that they have read, understood and accepted the terms of the SaaS. For example, sites might have a popup box that contains the entire SaaS. The user has to scroll to the bottom of the SaaS and then check a box (that is otherwise unchecked) to say "I have read and understood the terms of this Software as a Service Agreement and agree to be bound by them". This is known as a "clickwrap" agreement.

Websites or applications that use clickwrap agreements often also make sure that the "I agree" box appears on the same page as the entire SaaS (so that the user cannot argue that although they checked the box, they did not actually see the terms of the SaaS). It is also common for websites or applications to highlight specific terms for the user's attention if those terms might be seen as particularly unfair on the user.

The owner of the software should also make sure they have a system for keeping track of who has agreed to this SaaS. If there is ever a dispute in relation to the software, the owner will need to be able to produce evidence which proves the user has actually confirmed their agreement.

Applicable law

There are various pieces of legislation in Australia which may affect intellectual property rights, such as the Copyright Act 1968 (Commonwealth); the Patents Act 1990 (Commonwealth); the Trade Marks Act 1995 (Commonwealth); and the Designs Act 2003 (Commonwealth).

The Australian Consumer Law, which is set out in Schedule 2 of the Competition and Consumer Act 2010 may also apply.

In addition, the common law may apply to intellectual property matters. For example, Australian case law has considered many issues regarding copyright, such as what items are protected by copyright, and how long copyright protection might last.

A SaaS Agreement is a contract and general principles of contract law, as provided by the common law, may also apply.

If in doubt, seek legal advice.

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