04 Jul The Importance of Utilizing the Proper Agreement
The following is an article written by a member of the General Counsel at GeoTel Communications, LLC and discusses why it is important to utilize the proper agreement.
These days, every deal starts with paper and signatures. I like to think of the “paper” as tools in a toolbox. It isn’t that you can’t accomplish the same task using multiple tools, but each tool was likely designed to accomplish a specific part of the overall task. At GeoTel Communications, our legal agreements are no different, and it is important that we are utilizing the proper agreement for the specific deal at hand.
A license agreement is a legal contract between a licensor (the owning/granting party) and the licensee (the receiving party) who is granted access to what the licensor owns.
A software license agreement is used when proprietary software is being licensed by the licensor to the licensee. This typically means that the licensee gets access to the licensor’s copyright or other intellectual property because the licensee is downloading the software for use.
An end-user license agreement (“EULA”) is probably one of the more common types of agreements utilized. A EULA allows a user to purchase software that is installed on a laptop or computer. For example, years ago you could purchase Microsoft Office on a CD and install it on your computer. You would have likely agreed to a EULA, which said how to use the product and that the software could not be copied.
A Software as a Service (“SaaS”) Agreement is utilized when a third party hosts their service as an application in the cloud or on a server. This may be confusing because it is not the same as a software license agreement. In a SaaS product, the customer gets a right to receive the service or access the application. Where the confusion lies, is that it may be interpreted as a “license to access the service.” Additionally, many of the terms I have referenced are being used interchangeably and mistakenly in practice. Typically, SaaS Agreements are subscription-based, where users pay on a monthly or yearly basis. SaaS users do not get a copy of the software, they simply access it either through the web or a platform.
Additionally, another agreement referred to as a “white label” service agreement is where the product is created by one company, but then rebranded by another company to be sold. Keep in mind, this is different than just a distributor or a reseller selling a company’s product and receiving a commission for that sale. This “white label” agreement would be a company selling the product as their own, unbeknownst to the end-user. In this case, you would want an agreement to outline potential liability, intellectual property rights, obligations of each of the parties, quality control regulations, etc.
Keep in mind that one size might not fit all when it comes to these various agreements. An attorney may need to create a hybrid agreement which addresses your company’s multifaceted technology. Utilizing the proper agreement can help not just the licensor but also the licensee clearly understand expectations so that both parties know exactly what they are getting and how to properly utilize the product without potential legal consequences.
Heather M. Meglino, Esq.
General Counsel, GeoTel Communications, LLC