SaaS vs. License — The Fundamental Difference
In the SaaS model, the client doesn't receive a software copy — they access it via browser, paying a subscription. In the license model, the client receives the right to use a software copy on their own infrastructure. This difference has critical legal implications.
Key SaaS Agreement Clauses
- SLA — guaranteed availability (e.g., 99.9%), incident response time, penalties for downtime
- Data processing — where data is stored, GDPR-compliant DPA, right to export data
- Exit strategy — what happens to data after termination, export format, transition period
- Service changes — whether the provider can unilaterally change functionality, pricing, terms
License — Scope of Rights
License type (exclusive/non-exclusive), territory, term, number of users, right to modify code, sublicensing. The distinction between copyright ownership and usage rights is critical.
Limitation of Liability
Standard IT clause: liability cap (e.g., 12 months' subscription value), exclusion of consequential damages and lost profits. Negotiate carve-outs: confidentiality breach, IP infringement, willful misconduct.
Intellectual Property — Who Owns What
In custom software development: copyright belongs to the creator by default (developer/software house). Transfer requires an explicit written agreement. Without it — the client only gets a license.
Vendor Lock-in — How to Protect Yourself
Right to export data in open format, API documentation, source code escrow, reasonable notice periods, interoperability with other systems.
Negotiating a SaaS or license agreement? Get in touch — I'll help protect your interests.