1. 10 Things Non-IT Lawyers Should Know About IT Contracts
Evan J. Foster, Partner Saul Ewing Arnstein & Lehr LLP
Chesterbook Office
ACC Western Pennsylvania Program December 13, 2017

2. 1. You need to learn some basic terminology
You don’t need to be a programmer, but you should know some basic concepts & vocabulary:
Client, server, workstation
Object code/source code
Cloud
SaaS (software as a service) & variations
Test, development & production environments
Virtual machine
Maintenance vs. support

3. 2. License, Not Purchase Rights ultimately flow from copyright law.
Copyright owner has exclusive right to copy, modify, distribute, transfer, display, perform copyrighted works of authorship.
License gives the licensee certain of those rights. If you exceed the granted rights, you are potentially a copyright infringer, not just in breach of contract.
Owning a physical copy is not owning the software itself

4. 2. License, Not Purchase
For SaaS agreements, vendors sometimes don’t even use “license” language, they use language about “services” and “rights of access” to services and applications.

5. 3. You need to understand license scope
What is being licensed?
How long is it being licensed for? Perpetual or limited period? Subscription basis?
Enterprise-wide license or limited to a specific facility or specific set of users?
Other quantity limitations (processors, concurrent users, enterprise metrics like number of employees or patient admissions)?

6. 4. You need to know where stuff will be
Where is the software?
Where is your data?
“On-premises” model – your (or your outsourcer’s) data center
Numerous models of hosted/cloud/SaaS/ASP/remote computing
Where can your data go?
US only?

7. 5. You may need to specify what product/service will do
For simple off-the-shelf product, sometimes order form just recites the name of the product/service.
For more complex product, may want to attach specifications to lock in commitment to functionality that vendor promised.
Competitive RFP response may already have stated functionality commitments
Absolutely necessary for custom software

8. 6. You need to understand how product will be implemented
May not just be a download by you
Usually need a Statement of Work (SOW) for implementation services
Scope of work
Deadlines
Resources
Pricing
Provisions for change management

9. 7. You need to establish performance warranties
Conform to documentation
And specifications?
No malicious code
For some projects, warranties re interfaces and compatibility
Professional services done competently by qualified, trained people
Remedies? Repair/replace/refund? More?

10. 7. You need to establish performance warranties/standards
For SaaS/cloud agreements, performance standards are usually documented in Service Level Agreements (SLAs)
Uptime/availability
Speed/latency
Response & resolution time for support requests
Typical remedy includes service level credits (deductions for underperformance) as well as termination rights for material/repeated failures

11. 8. You need to understand how product will be maintained/supported
Maintenance – bug fixes and periodic updates
Support – vendor “help desk”
Understand ongoing maintenance and support fees, keep separate from license fees
Guaranteed duration of maintenance/support
How long are prior versions supported?
Caps on maintenance/support fee increases?

12. 9. You need to understand data rights
Make it unequivocal that you own your data
Watch for provisions that give vendor the right to mine or aggregate data in some form
If vendor will have possession of any of your data, provide for getting your data back on request and on termination
Transition services
Post-termination right to use

13. 10. You need to think about limitations of liability
Software industry standard is no consequential damages, and dollar caps based on fees paid, but negotiation is possible.
Look for carveouts (fraud, IP, infringement indemnity and other indemnities, bodily injury/property damage, confidentiality/privacy breaches)
Negotiate multiple of fees paid, try to base on overall contract value, not small pieces
Low limitation of liability = no practical remedy

14. Baltimore Boca Raton Boston Chesterbrook Chicago Fort Lauderdale
Lockwood Place
500 East Pratt Street, Suite 900 Baltimore, MD
T: • F:
Boca Raton
433 Plaza Real
Suite 275
Boca Raton, FL 33432
T: • F:
Boston
131 Dartmouth Street
Suite 501
Boston, MA 02116
T: • F:
Chesterbrook
1200 Liberty Ridge Drive Suite 200
Wayne, PA
T: • F:
Chicago
161 North Clark
Suite 4200
Chicago, IL 60601
T: • F:
Fort Lauderdale
200 E. Las Olas Blvd.
Suite 1000
Fort Lauderdale, FL 33301
T: • F:
Harrisburg
Penn National Insurance Plaza 2 North Second Street, 7th Floor Harrisburg, PA
T: • F:
Miami
Southeast Financial Center
200 S. Biscayne Blvd., Suite 3600
Miami, FL 33131
T: • F:
New York
555 Fifth Avenue, Suite 1700
New York, NY 10017
T: • F:
Newark
One Riverfront Plaza
Newark, NJ 07102
T: • F:
Philadelphia
Centre Square West
1500 Market Street, 38th Floor
Philadelphia, PA
T: • F:
Pittsburgh
One PPG Place
Suite 3010
Pittsburgh, PA 15222
T: • F:
Princeton
650 College Road East, Suite 4000 Princeton, NJ
T: • F:
Springfield
808 South Second Street
Springfield, IL 62704
T: • F:
Washington
1919 Pennsylvania Avenue, N.W. Suite 550
Washington, DC
T: • F:
West Palm Beach
515 N. Flagler Drive
Suite 1400
West Palm Beach, FL 33401
T: • F:
Wilmington
1201 North Market Street
Suite • P.O. Box 1266 Wilmington, DE 19899
T: • F: