INTRODUCTION
With the growth of technical advances the legal implications in the IT industry have increased. This gives rise to significant legal complications in the drafting of various technology agreements. The different types of technology agreements such as shrink wrap agreement, end user license agreement etc. are coming into use more frequently.
A technology agreement refers to any agreement which provides a user with license to use the software or have developed a software. This article explains the three types of technology agreements which are relevant in the industry and further it explains the important clauses or boilerplate that the respective agreement has.
DIFFERENT TYPES OF TECHNOLOGY AGREEMENTS
The different types of technology agreements are as follows –
- Software License Agreement – In agreements of this kind, the software vendors depending upon the necessities and the conditions of the agreement give the rights to a customer to use, own, improvise or resell the software. For example the “end – user license agreements, browse wrap agreements, click wrap agreements or the shrink – wrap agreements” fall under this category.
A shrink wrap agreement is an agreement which comes with the products that are shipped and contains conditions and terms such as the fees or payment, warranties etc. These agreement are generally followed by the end user license agreement.
Some of the important clauses under this agreement are –
- The usage license – this clause of the agreement clearly explains the software for which the rights are given. It includes the user, publisher, distributor and an escrow agent of the software. Thus, each and every document, clause and terms relating to the software.
- Nature of the license – in this clause the nature license is mentioned that whether it is a limited or unlimited grant, non – exclusive or exclusive or transferable or non – transferable. A limited license means that the user has the right to use the software for a limited purpose only. If a license is non – exclusive then the vendor of the software has the right to sell the software to anyone. Further, it is necessary for the vendor to know that whether there are any other models that are licensed with or without the software.
- Termination of the agreement and T&C – a user can procure the software in two ways either the trail version which has a limited access for the software or the paid version which can run for an indefinite period of time. However, in the case of paid software the agreement needs to be renewed before the date of expiration. This clause of the agreement guarantees that in the case of breach of any clause the agreement would terminate.
- Software development Agreement – an agreement between a client and a software developer to develop the software according to the needs of the client is known as a software development agreement. In such an agreement the software company has to work according to the conditions and terms of the client.
Some of the important clauses under this agreement are –
- IPR clause – The Intellectual Property Rights clause generally implies that the client for whom the software has been developed will have the Intellectual Property Rights after the completion of such software development. In return the software developer has the right to reuse the codes or method or any material through which he created the software. Although this right with the developer is for his/her internal use only.
- Termination of the agreement and T&C – Generally this kind of agreement do not have an expiry date, the termination of agreement depends when the software development is completed. Hence, such an agreement gets terminated either when the software is developed or either party breaches any of the condition of the contract.
- Warranties by the developer – This clause implies that the software developed will be up to the expectations and conditions of the client. The software will be compatible with the required systems that the client wants. The developer will solve the issues if arisen in case they arises within the period of warranty.
- Non – compete – This clause involves the condition if not entering into an agreement with the competitor of the client during the said period of agreement. It protects the client from being exposed to the competitors.
- Non – solicit –This clause makes sure that either of the party to the agreement neither hires the employees, customers or projects of the other or its subsidiaries. Additionally it also ensures that either party do not try to influence any employee or customer to leave the other party or its subsidiary.
- Cloud Computing Services Agreement – in this kind of agreement the cloud computing service provider gives the following services to the user or client –
- The SaaS software,
- A platform inclusive of development tools that will help run and manage the applications of the software, a hardware and a software stack.
- The providers sometimes also provide with storage facility in addition to the physical or virtual servers.
Under these the service providers generally give access of such software to the users or clients instead of providing the license of the whole software.
Some of the important clauses under this agreement are –
- License – A license is provided to the user to use the services of cloud computing software and the services mentioned above.
- Data security and confidentiality – This clause provides for the terms and conditions of how the data can be used and also to protect the confidential information about the users. If a user or client processes the data solely using the cloud computing services, the responsibility for the protection of such data is with the user or client only. Thus, the user or a client should ensure that the agreement includes a clause which covers the implementation of efficient security measures which can qualify as “industry standards” as the data of the client will be stored in the software of the service provider.
Additionally, the client or user should ensure that a confidentiality clause should be incorporated in the agreement. A clause can be added which restricts the software developer to share any information about the client to the third parties until and unless necessary. Further, a clause can be added which enables the client to do an audit review for the service developer’s data protection about which the client should be informed.
- Restrictions and rights of ownership – This clause helps in protecting the Intellectual Property interest of the parties to the agreement. Hence, it can be concluded that the IP rights of the data of client is protected. However, the ownership of the cloud service is with the service provider which protects the IP interests of the service provider.
Further, a clause is added which protect the service provider from the dispute that arises between the third party and the client. This clause also restricts the client from altering the cloud service or copying such cloud service for its benefit.
CONCLUSION
The law provides for most of the disputes that can arise with the technology agreements, however, it depends on the how an agreement is drafted. At the end of the day, much of contractual law which is not explicitly provided for in the Indian Contract Act is at the discretion of the courts and the exact content of the contract in question.
YLCC would like to thank Oishiki Bansal for her valuable contribution in this article.