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SaaS License Agreement: Software As A Service FAQs

SaaS License Agreement: Software As A Service FAQsQ: What is a SaaS license agreement?

A: It’s a contract that grants permission to use a software application via the Internet that’s hosted on a cloud computing platform. Common platforms include Amazon AWS and Microsoft Azure.

Q: What does SaaS mean?

A: It’s an acronym for “Software as a Service.”

Q: How is this different than a traditional software license?

A: Prior to there being sufficient bandwidth to support SaaS, software agreements focused on desktop applications and apps hosted on a local server for internal use rather than via the Internet.

Related Article: Licensing Your Software With A Click-Wrap Software License Agreement

With SaaS, putting the application on cloud platform creates additional legal risks that must be protected against in the licensing agreement as well as different rights that need to be explained so that both the licensor and the licensee understands what can and cannot be done with the software when it’s accessed online.

Q: Is a SaaS subscription agreement the same as a SaaS license agreement?

A: A SaaS subscription agreement is one type of SaaS license.

It’s commonly used where a customer pays monthly or annual fees to access the app online. When the subscription terminates, the customer loses access.

Related Article: How To Use A Software Evaluation Agreement

However, there are other types of SaaS licensing options. For example, a single license fee might be paid (rather than recurring fees) for permanent access to the software as long as the customer wants to use it.

Q: Is a SaaS license an End User License Agreement (EULA)?

A: It can be. However, there are variations in SaaS licensing. Although one might license to a company and its employees under a EULA, it’s also possible, for example, to have SaaS licenses that permits resale via private labeling.

Related Article: EULA – 7 Keys Parts Of An End User License Agreement

In such a scenario, the underlying software is accessed on the cloud platform. However, the private label licensee has an interface that rebrands the app for access by customers the licensee has procured under the private label brand.

Q: How do you know what’s the best Software As A Service Agreement for your app?

A: Speak with an experienced software lawyer who can advise you and prepare the right SaaS license agreement template for your unique needs.

Mike Young, Esq.

Author Mike Young, Esq.

Mike Young has been practicing business and technology law since 1994 and is an angel investor in startups. He's been an entrepreneur since 1988. To get legal help from Attorney Young, click here now or call 214-546-4247 to schedule a phone consultation.

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