The cloud property in business

As organizations trust more on cloud computing, problems like legal environments, copyright law, security, legal protection of databases and privacy still generate concern–although those considerations are easing, as each firm and industrial cloud vendors have created excellent progress in these areas over the past 2 years.

Data is a modern form of wealth in the digital world, and massive amounts of data circulate in cloud environments. The data in the form of information, personal and professional data of many users, co-exist the hardware architectures and software programs running the cloud services. This setting requires a twofold protection: on one side, the cloud is made up of hardware and software that constitute the business assets of the service provider (property of the cloud); on the other side, there is a definite need to ensure that users retain control over their data (property in the cloud). The law grants protection to both sides under several perspectives, but the result is a complex mix of interwoven regimes, further complicated by the intrinsically international nature of cloud computing that clashes with the typical diversity of national laws.

However, there is another area of governance and safekeeping on the horizon that many companies still haven’t adequately addressed: the ownership of applications that they originate or sponsor in the cloud.

The intellectual property rights to software that companies develop or sponsor in the cloud are becoming a larger issue. The question companies must ultimately ask is this: Who owns the software?

Case 1: Proprietary software on certain cloud vendor’s platform

In spite of the fact that you will utilize a specific cloud vendor’s platform, however, your point is to develop a proprietary module of software that is exceptional to your business, that you claim the rights to, and that will give you some sort of competitive advantage.

In this situation vendor consents to allow you to do or support the work the vendor’s in-house staff does. You initially fund the development effort. When the product is ready, you deploy it for yourself and you have a commercial agreement with the vendor where you typically receive a percentage of each sale to an outside party as part of a licensing agreement. The bottom line is that you own the software rights and can license and make money from it–but you do not own the software to the degree that you can prevent others from using it. 

Do you own the software, since you are using the client’s product architecture to construct it?

Case 2: SaaS (software-as-a-service)

A start-up or medium size organization needs to improve its analytics capabilities yet does not have to develop appropriate analytics solutions for management. 

The organization picks a SaaS (programming as-an administration) vendor that offers not only technical IT and business expertise in logistics, but also a library of customizable best practice analytics reports and templates that the company can immediately adapt and start using for its purposes.

Does the company own the software it develops from the templates? In most cases, if you read the fine print of the SaaS vendor agreement, the answer is No. By using the templates (which likely have been contributed by other vendor clients) the company can leverage this existing expertise. Conversely, if the company develops its custom reports, these products also become fair game for others to use and modify.

Case 3: IaaS (infrastructure-as-a-service) 

In this scenario an enterprise rents IaaS (infrastructure-as-a-service) from a commercial cloud provider and outsources all its application development and testing to this IaaS provider.

Does the organization claim the exclusive software it makes for its business? If the hosting environment is IaaS and the organization is not interacting with the vendor in any way in the software development phases–and the agreement with the vendor clearly states that the IaaS resources of the client company are kept separate from that of other vendor customers–the answer is yes.

Conclusion

The changes that cloud computing brought along make it difficult to qualify it using traditional legal categories. Cloud computing is a modern paradigm that introduces a novel business model. On one side, it is now a well-developed model, resting on a consolidated common ground. On the other side, however, it is a multi-faceted world, with many different types of applications, each with its peculiarities. 

In a situation where it is not possible to have a standardized and uniform legal regime for all possible needs, where can businesses and individuals look for appropriate protection? While cloud computing offers them many benefits, it is important to find the most suitable cloud solutions for one’s applications and data.

In all cases, it makes sense to include a legal checking process for the software you want to build before you seek a cloud vendor. Thusly, you must know to go into the vendor assessment process whether the application IP must remain inside your organization or whether you need to benefit it to a bigger group of audience.

DISCLAIMER : Views expressed above are the author’s own.

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