Think Before You Share, Part I: Can They Use My Data, and If So, For What?

26 September 2013 Technology Transactions Today Blog

Increasingly, software vendors and professional services providers (for example, consultants and software implementation vendors) request or require access to their customers’ data as part of delivering their products and services. This kind of data sharing can produce powerful, low-cost products and services – but it is not without risk. Before you share your data with a cloud software provider or other vendor, the following three questions should be at the top of your due diligence list.  I’ll address them over the course of three posts this week, starting with: Can They Use My Data, and If So, For What?

If you are sharing data with a cloud software provider, the answer to the question – can they use my data? – is almost certainly “yes.”  In order to make their products available to you over the Internet, cloud providers need certain limited rights to use your data. The key is in the second part of the question – “for what?” The answer: the vendor’s right to use your data should be limited to only those uses that are necessary to provide the software and services.

Cloud software providers, for example,  typically require the right to copy your data onto their servers and transmit it to you over the Internet. If the software includes functionality that allows you to work with your data in the cloud, the vendor may need the right to modify you data as well. But be wary of language in contracts that gives the vendor broad rights to use your data in ways that are not specifically tied to the services. For example, many agreements include provisions that permit the vendor to collect, use and/or distribute your data in de-identified or aggregate form to improve its products, develop new features and functionality, or simply sell it to third parties for their use. While there may be limited circumstances under which a vendor should be able to collect certain kinds of general usage information from you to improve the product (for example, collecting anonymous statistics about which menus are used most frequently to make sure they are easily accessible within the application), there are very few instances when it is appropriate for a vendor to use your data (even in de-identified form) for its own product development efforts, business purposes, or to provide to third parties.

Check back in next week for an answer to the second question, one that many jump to ask next: Can You Get Your Data Back?

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.