Feedback Clauses; More Dangerous Than you Think
Brian Heller
Tech Deal Lawyer (SaaS / Cloud, AI, Advertising, Licensing, etc.).......... --> 20+ yrs experience: BigLaw, In-House, BizDev, CorpDev, etc.......... --> JD/MBA (JD cum laude from BU; MBA from Michigan)
Feedback clauses are common in SaaS and software deals, and increasingly, in other types of vendor agreements. These clauses sound benign, but beware!
Typically, they say that the customer grants broad rights to the vendor to use or own any “feedback” received from the customer about the vendor’s products or services (e.g., “it would be great if your tool did X”).?
The problem is that many of these clauses are overly broad. While these clauses are theoretically intended to only cover feedback about vendor products, it could inadvertently include ideas about the customer’s own (actual or potential) business plans, products roadmap &/or new business ideas.?
By agreeing to a seemingly innocent looking feedback clause, a customer may inadvertently give up some of their own intellectual property rights and/or confidentiality protections.
Here’s what you can do.
First, you can try to delete these clauses entirely.
Second, as a fallback, if you are unable to remove the entire clause, here’s how to protect yourself.?
领英推荐
Hopefully this helps.?
If you have any questions or need help negotiating these (or any other) provisions, feel free to contact me at [email protected].
-----------------------
About the Author:
Brian Heller is a Tech Transactional Lawyer (Digital & Social Media, SaaS, Ad Tech, etc.) for Outside GC (OGC), a different kind of law firm.?
OGC is virtual, so it’s much more affordable, and all OGC lawyers have prior in-house GC experience and/or experience in business roles.
Brian started his career with Shearman & Sterling in NYC, then Akin Gump in DC), then in-house in a variety of tech companies, and in Business Development and Corporate Development roles, including in a Private Equity owned startup, with a successful exit.
Share this post:
The problem here from a service provider providing COTS products (SaaS or on prem) is that while the risk is low that Feedback would include Confidential Information of the Customer, the potential consequences are severe. Service Provider can't be in a position that it potentially doesn't own features/functionality of its products it uses to provide services to its Customer base generally, and it's not administratively feasible to train Service Provider personnel to not use Feedback w/o checking w/Legal first. I typically push back and say the compromise position is the fact that each party can freely use the Feedback. This isn't an issue unless the Customer has designs on creating a product that competes w/the Service Provider.
Just saw my first NDA come through with a feedback clause Brian Heller. Seems ridiculous and out of place. I would never sign an NDA with a feedback clause. No money is changing hands, it's overbroad, etc. Is that becoming common?
Global Business Lawyer I General Counsel I Helping companies and business owners succeed in complex commercial and regulatory environments I Your Business Strategy is your Legal Strategy
9 个月Brian, just had one of these come up yesterday! Years ago, I was in-house counsel and reviewing what was described to me as a “consulting” agreement. It’s only labor, etc… While working with this conuslting company, my company had created a potentially patentable process. The “consulting agreement” was silent. Fortunately for us, the conuslting company wasn’t interested in their claim and signed off on the patent filing. Fast forward to yesterday, I inserted “joint owenship, pursuant to US patent law and other applicable law…” Fool me once, not twice!
This series of posts is great. Master class in commercial contracts. Thank you.