Data Licensing: Data As Part of a Broader Solution

In my prior posts, I discussed licensing data in Data License Agreements, where the main focus is on the data itself. I discussed common issue areas for both licensor and licensee to get you thinking about licensing data as a revenue stream and for operations and product. In today’s post, I discuss the second, main context for licensing data: as part of a broader product offering.

Data as Ancillary to a Solution

Often, SaaS agreements have a data licensing component that is part of the larger context of subscribing to a SaaS solution. These data licensing arrangements are fundamentally different from agreements where data is the core asset being bought and sold because the main focus is on providing the platform, not customer data or collected data. In this case, the data is ancillary, but required, to provide the SaaS solution, and its relative importance is reflected in the terms.

Common Issues

Here are a few common issues in SaaS agreements relating to data: 

1. Specific Data: What data is covered here? Is it the customer’s data, such as customer inputs, the platform’s customer-specific output, or both? How about each customer’s usage data and feedback?
2. Ownership: Who owns the data in question? Customers usually want to own the data they upload or provide, which is industry-standard and reasonable. But, what about usage data? Which types of data are the confidential information of which company?
3. License Terms: If you’re the platform provider and want to use customer data, you’ll need a license for all your use cases; typically to provide the core service, technical support, and for updates and bug fixes, among others. However, if you want to use their data to track customer engagement, aggregate it with other customers’ data for analytics and other business purposes or sell that data, you’ll need a license from each customer. 
4. AI Use Cases: If you’re the platform provider and want to use customer data for AI development, you’ll need consent and a license to do so. How will you use the data? When the license to the data ends, what happens to the training of the AI model that has already occurred? 

When data is licensed as part of providing a platform or broader solution, often the focus is more on improving product features and providing technical support, which are solution-specific and are reflected in the contract terms. It’s important to understand what uses you’ll have for the data you’re licensing in or out, and its value to your company. It’s best to speak with a commercial attorney to determine how broadly or specifically to draft these data license provisions to cover your uses and be aligned with industry practices.

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