SaaS litigation, software service level agreement, cloud computing lawHow many times have you signed up for a service on-line, scrolled past all the legal jargon, and clicked "I Accept" or "I Agree" without taking the time to actually read the terms and conditions you're agreeing to? 

Admit it.  We all do it.  

But, just as a warning to be careful the next time you're purchasing that new mp3, or more importantly signing your company up for something on-line... those shrink-wrap and click-wrap agreements have been held by the courts to be binding.

Contracting in cloud computing law doesn't necessarily require a signature these days.  An affirmative acceptance of the provisions of a software service level agreement by an authorized agent can be given with a click of a button.

Take the recent trademark infringement case of Appliance Zone, LLC v. Nextag, Inc. for instance.  Although this case was dismissed on grounds of jurisdiction (which, incidentally, was a term of the shrink-wrap agreement that was held by the court to be an effective document) the court discussed some important software litigation surrounding click-through agreements within it.

In essence, if the facts support a claim that a person (a) is authorized to enter into such a contract, and (b) had the intent to enter into it, then they will be held to terms of service they signed up for, including basic contracting terms such as jurisdiction, venue, etc, etc.

The court in this case cited Gallent Ins. Co. v. Isaac in ruling that there was authorized conduct that clearly demonstrated the acceptance of a valid contract by the 19 year old website manager of Appliance Zone who registered the company as a merchant on Nextag's website and clicked "I accept the Nextag Terms of Service" as part of the process.

While the enforceability of a contract can be destroyed with factors that make it unconscionable (such as inequality of bargaining power, or unreasonable or unknown terms) the court did not find those arguments sustainable in this case for a number of reasons, including the fact that clickable acceptance has become commonplace for on-line retail, and the registration process could not have been completed without the click-through acceptance.

The court in this Indiana technology litigation case fell back on Paper Exp., Ltd., Micrometl Corp. v. TranzAct Technologies, Inc. with the "fundamental principle of contract law that a person who signs a contract is presumed to know its terms and consents to be bound by them." 

Next time, before you click "I Accept" make sure you really do.


Indiana Software Litigation, Indiana Technology CounselHere at Alerding Castor Hewitt, LLP, often times we work with clients who have software that inherently transcends state and national borders. 

Not just brick and mortor storefronts, many of our clients have customers nationwide and around the world.

Such is the realm of cloud computing law, and it's up to us as technology legal counsel to answer the inescapable question of what state, federal, or even country's law applies should a lawsuit arise.

Well, if you haven't contracted for this simple jurisdictional provision specifically in the terms of your license agreement or software service level agreement, as a SaaS company you may just find yourself flying over to London someday to deal with a breach of contract under U.K. law and their interpretation of your agreement. 

All I have to say is good luck, and I hope you are prepared for those Barristers' premium legal rates. 

Even if you win your case, you just wasted a tremendous amount of valuable time and money unnecessarily on SaaS litigation in the "wrong" venue.

I'm all for making the deal, but before you go shaking hands and rolling out your new Software as a Service application with a form agreement and without proper advisement, be sure to consult with reliable technology counsel to help you draft a solid agreement for your company's SaaS product.