An End User License Agreement and a SaaS Agreement both look similar on the surface but have several differences and are used in distinct situations. This post will highlight these distinctions so you know the appropriate document in a particular scenario.
Let’s start with the similarities. Both an EULA and a SaaS Agreement are used to protect the intellectual property of the software or hardware. Although the approach taken is different. Also, both are legal documents governing the relationship between a vendor and a user. EULA focuses on licensing of the IP while SaaS Agreement focuses on the services offered through the IP.
Now, to the differences. EULA is a type of software licensing agreement, while a SaaS Agreement is more of a contractual agreement on services offered and doesn’t license.
Software licensing agreements are used by vendors to grant permission to users to use their software within applicable limits. A license is necessary because vendors have sole ownership in the IP and control use by third parties. Thus, through the license, in this case, an EULA, the user can do things like copy, install, use, reverse engineer, modify and other activities allowed by the vendor under the license. Any act of the user outside that allowed under the license automatically becomes a violation.
A SaaS Agreement on the other hand, as earlier mentioned, governs the services offered by the vendor to the user. A key difference here is that usually, the user does not install the vendor’s software and only has limited access and use through the internet. A typical SaaS agreement will contain clauses relating to issues like billing, subscription terms, ownership of data and other negotiable terms.
One can deduce from the above that while both an EULA and a SaaS govern the relations between a vendor and a user, the scenarios where each is applicable are totally different. This emphasizes the need for retaining the services of a lawyer to ensure the right legal instrument is applied.