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09 July 2020

A license agreement regarding a cloud storage

The preparation of agreements on granting the right to the use of software products is extremely popular currently, and a great number of questions arise among both the right holders and the users of the software products. The use by a Licensee of programs for electronic computing machines can be planned and provided in various formats, such as the use of the program in its unchanged form, or with the possibility to be changed and scaled, the use of only the program code, the modification and the improvement of the program, the use with the implementation of its maintenance, etc.


Now, we shall consider one of the variants of an agreement, when the right holder grants the Licensee the right to the use of the program in a so-called “intangible form,” i.e., not the specific program on a tangible medium, but a certain virtual opportunity to use a “cloud service” for the Licensee to perform the functions he needs. If everything is more or less clear with the normal program for electronic computing machines, we transfer it to the Licensee, for example, on the USB medium under an acceptance and transfer act, then everything is not so clear with the virtual “cloud format,” how it works and how the rights are granted in reality.


Let us find out what is a cloud storage? The cloud storage is a model of the online storage, where the data is stored on numerous servers distributed over the network, provided by the Right Holder for the use by its Users. In contrast to the model of storing data on the own dedicated servers, which are purchased or leased specifically for such purposes, the number or some internal structure of the servers is not visible to the Users generally. The data is stored and processed in a so-called “cloud,” which is one large virtual server. These servers can be located geographically remotely from each other. 


That is, for example, the program can be an information system located in the cloud storage that allows storing and processing the majority of the data that is critically important for the work of the company. These can be keeping any business processes, optimizing them, accounting for the customer base, creating accounting and other reports, etc.


Thus, the Licensor grants the Licensee the right to access the cloud storage, and granting may also be fixed by the parties to the agreement in the acceptance and transfer act, but the mechanism of interaction between the parties in this case, as you understand, is somewhat different.


The Licensee shall receive the following under a license agreement:

  • the right to log in to the Software to access the cloud storage; 
  • the right to transfer the data to the cloud storage and to store it;
  • the right to process the data in order to solve the Licensee’s tasks to optimize the business processes;
  • the opportunities for the Licensee to set tasks and to prepare the accounting data, when carrying out the activities of the Licensee’s enterprise; 
  • providing the Licensee with the opportunity to perform an analysis and to generate the reports using the information resources of the Software;
  • providing terminal and web access to the Software to the Licensee’s employees; 

And so on, and so on, depending on the program, as well as on the objectives and tasks of the Parties to the agreement.


As far as judicial practice is concerned, the courts often consider the agreements on the grant of the right to store and to process the information to be the commercial services agreements. Estimating the legal nature of this agreement, the courts believe that the most common contractual model for granting the “cloud” service is exactly the commercial services agreement. It is often impossible to disagree with this, the “cloud service” built up according to the specific model may be qualified by the parties to the agreement as the commercial services agreement.


This is confirmed in the following judicial acts:

  • The decision of the Arbitration Court of the Novosibirsk Region of June 4, 2014 in case No. A45-402/2014.
  • Resolution of the Ninth Arbitration Court of Appeal of January 16, 2015 No. 09AP-55322/2014 in case No. A40-77325/14.
  • Resolution of the Ninth Arbitration Court of Appeal of December 19, 2014 No. 04AP-4738/2014 in case No. A78-5032/2014;
  • The decision of the Arbitration Court of Zabaykalskiy Krai of January 26, 2015 in case No. A78-14182/2014.


However, it is a very common situation, when the program that represents the “cloud service” is the part of the set of the exclusive rights under a franchise agreement, or granting the right to the use of this subject matter is nothing other than the subject of the license agreement. Thus, in case No. A71-13972/2017 (Resolution No. 17AP-61/2018-GK of 15.02.2018), the subject of the consideration was the license agreement under which the Licensor had granted the Licensee, in addition to its commercial designation, the right to connect the licensee to the ERP system and other information resources.


It is clear from the content of the case files that the option seller (Licensor), in compliance with the terms and conditions of an option agreement and the license agreement, gave the option buyer (Licensee) an access key (password) to the first and the second parts of the franchise package located on the Internet on resource http://disk.yandex.ru (the cloud storage). A large number of the “cloud services” provide the right to the use under a joinder agreement.

According to Paragraph 1 of Article 428 of the Civil Code of the Russian Federation:  “The joinder agreement is the agreement, whose terms and conditions are defined by one of the parties in formulars or other standard forms and which could be accepted by another party only by joining the offered agreement as a whole.”

 

Currently, the most popular “cloud services” are:

  • Dropbox
  • “Google Drive” (Google One)
  • Mega
  • “Яндекс.Диск”
  • OneDrive
  • “Облако Mail.Ru”
  • iCloud
  • Box
  • IDrive
  • pCloud

 

Thus, we can conclude that with the appearance of the new kinds of software products, the contractual algorithms for their use are transformed. Therefore, it is necessary to understand the nature of the very program for electronic computing machines, in order to build up a legal scheme of interaction between the parties regarding its use.


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