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Sun 15 Nov 2009 04:00 AM

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Clients in the clouds

Fiona Robertson from the Rights Lawyers takes a closer look at the terms and language used in cloud contracts.

Clients in the clouds
ROBERTSON: The potential for damage if the cloud does not work is going to be an important contractual point.

Fiona Robertson from the Rights Lawyers takes a closer look at the terms and language used in cloud contracts.

In late October, the Disney Corporation, one of the most influential media organisations in the world, announced that it is working on a system to offer consumers access to movies, anywhere, anytime.

They will be doing this by using a cloud. With Disney announcing that it is planning to head this way, and Apple undoubtedly (though unannounced) also working on a similar delivery platform, it seems likely that, whilst the concept of a cloud has certainly been floating around the IT industry for a long time, major organisations are now looking at it with new eyes.  So, you might actually get asked to provide one soon!

To avoid having a discussion about the various definitions that people have for clouds, I am going to take the Disney strategy as the model for this article. My cloud allows certain users to access the material that is stored within the cloud at any time, at any place, from any media.

So what are your clients going to be looking for when they walk in and ask you for a cloud? Legally, there will be several key issues.

Primarily your client is going to be seeking security. So if Disney walks in to see you tomorrow, they are going to require a contract that contains many guarantees in relation to security. For you, as a supplier, you should ensure that once it has been created the cloud is not touched by your clients and, if it is, it is their responsibility.

The potential for damage if the cloud does not work for a number of minutes or hours or days is going to be an important contractual point for your client. You need to look at the clients' business model - a client who is delivering entertainment to subscribers is, perhaps in your view, not going to suffer terrible damage if the cloud is down for a number of hours.

However, for Disney, for example, an outage will be considered very detrimental to their brand. Let me assure that if you have a bunch of eight-year-old kids sitting in your lounge room waiting to see Cars and the cloud doesn't work, Disney will get a very unpleasant phone call.

While for you and I this sort of issue appears to be quite minor, for a company that is so conscious of its image and its brand in the context of family values, Disney will take it very seriously. In fact, you may find that Disney takes this more seriously than a government authority who, let's face it, already has no issue with a customer standing in a queue for several hours in order to renew a licence!

All too easy to overlook in some jurisdictions in the Middle East is the question of privacy. However a company that is based in, for example, the European Union, will demand exacting standards of privacy protection for its users. This means that, as a supplier, you must ensure that the system complies to world best practice in this regard. It is also in your best interest as well.

If you are involved in the administration of the cloud after its creation, you should also require the client to agree that it will comply with world best practice in relation to privacy. You should ensure that they give you a complete indemnity in relation to the actions of third parties in relation to this information once the cloud is operational.

Clients who come to you seeking to create a cloud for their organisation or their customers are taking a big risk - and that risk is you. They are betting that you are going to stay in business, that you are going to perform in accordance with service-level-agreements, that you are going to work in their best interest, that you are going to work to protect their brand and market image and that you are going to make their management happy.

The contract that you sign will be the overall roadmap that creates that special relationship and sets the expectations of behaviour in place for seyears to come. Invest wisely in the words you choose.

Fiona Robertson is a solicitor with the Rights Lawyers.

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