What happens when you put customers, salespeople, and integration engineers together in a conference room?
This isn’t the setup for a bad joke, but it could be if your SaaS agreements don’t address IP development or customer feedback.
Listening to your customers is crucial, especially for early-stage companies still developing their initial product and service offerings and finding their market fit. That early customer feedback is, as they say, a gift and will help your business team build a better product. But it is important to make sure you address feedback in your agreements to avoid disputes down the line.
Feedback clauses in the real world
Let’s take a real life example. Lexion Chief Legal Officer Jessica Nguyen was an early employee at the legal tech company. As she explained in a recent CLE, she wants to ensure that her customers know that the feedback they give to Lexion will be used to make its software better, and, to do so, any feedback the customer provides to Lexion won’t be considered customer confidential information and will not be the intellectual property of or a trade secret of the customer. In her discussion with co-panelist, Cédric Burton of Wilson Sonsini, as a data privacy and cybersecurity lawyer, he would kick the feedback questions to his technology licensing group. (Ah, the joys of working at a large law firm and not in an in-house team of one.)
So, as a former member of the Wilson Sonsini technology licensing group Cédric mentions, what is my feedback on their feedback discussion?
Jessica is right. It is critical to let customers know the expectation that when they provide you with ideas you plan to use them and the customer cannot later come back with a claim that you misappropriated their “idea” (or their IP). Presuming a SaaS relationship where the ideas relate to an existing product of the service provider, and aren’t patented, there may not be an underlying IP right involved, but it is still important to make clear that feedback is not considered confidential information or a trade secret of the customer, and that the service provider can use the feedback, without payment, in any manner it pleases.
For an example, let’s look to a publicly available, SaaS provider-friendly provision from Google. Google Cloud’s terms: https://cloud.google.com/terms (pulled on Dec. 20, 2022).
5.3 Customer Feedback. At its option, Customer may provide feedback or suggestions about the Services to Google ("Feedback"). If Customer provides Feedback, then Google and its Affiliates may use that Feedback without restriction and without obligation to Customer.
Short, sweet, and to the point.
Reviewing feedback clauses
When you’re reviewing feedback provisions, as a SaaS provider what should you look for?
1) Make sure that any customer feedback is excluded from customer confidential information.
2) Ensure you have broad rights to use the feedback without compensation or obligation to the customer.
3) If the services you’re providing include any custom development or joint development, don’t forget to listen to Cédric and engage your friendly neighborhood technology licensing attorney to help craft a more appropriate provision for the scenario. If IP will be created, it is important to delineate rights pre-development and grant the appropriate IP licensees or assignments in the agreement.
Learn about feedback (and more) in the In-House Connect webinar, “How to Redline SaaS MASs and DPAs for In-House Counsel.”
Disclaimer: The information in this blog post is not legal advice and is provided for general informational purposes only. Contact your lawyer for legal advice.