Tracking the terms

One of the perceived advantages of cloud computing services is the ability of service providers to update and upgrade their software in a seamless manner, without having to install new software on customers’ systems.

Unfortunately – from the point of view of customers – the same can apply to service providers’ terms of business, particularly on consumer-facing services where no written contract is in place. Many major websites routinely alter their terms of business, privacy policy and other key policies, and it is often difficult for users to see what changes have been made since they signed up. This has led to controversy on a number of occasions, such as when Facebook was forced to withdraw changes it had introduced, after protests by users.

The Electronic Frontier Foundation (EFF) has now set up a new site,, to track these changes in policy on a range of major websites, including Apple, Amazon, Facebook, eBay and Google. It’s somewhat US-centric, but a number of the terms and policies listed will be relevant to UK users.

UK businesses need to bear in mind that the technical ability to change their online terms is not necessarily matched by the legal ability to enforce those terms. Terms in consumer contracts allowing unilateral variations to the terms are likely to be invalid under the Unfair Terms in Consumer Contracts Regulations 1999 unless they are carefully drafted (see the OFT’s very helpful guidance on the Unfair Terms Regulations). Any change which adversely affects consumers’ rights is likely to be unenforceable, and may also give rise to harmful publicity, as experienced by Facebook.

How healthy are your software licences?

The Business Software Alliance is promoting a “Software Health Check” – a software licensing “self-audit” scheme to encourage businesses to ensure they have valid licences for all the software they use (and for all the ways in which they use it).

Software licensing can be highly complex, especially as virtualisation, multi-core processors and outsourcing transform how companies use their IT. There are probably few companies that are 100% licensed for all the software they use.

Of course, there is another side to the BSA’s initiative. I’ve noticed a trend in recent months for software companies to approach their customers demanding an audit of their licensing, and this voluntary self-audit scheme probably has a similar motivation: namely, software owners making extra efforts to ensure they receive their full entitlement of licensing and support income from existing customers, in a climate where new business is harder to come by.

And the BSA’s website includes prominent links for those wishing to “report piracy”. Again, this may be an important area of exposure for many businesses, as layoffs (not least in IT departments) may prompt disgruntled ex-employees to report their former employers for use of unlicensed (or “under-licensed”) software.

So it’s highly recommended that businesses take the hint and review their software licensing position. However, they should take care to note that each software licence needs to be considered on its own terms, and will need looking at particularly carefully if:

  • they are using software in a “non-traditional” way (such as virtualisation, remote access or “in the cloud”); or
  • they have grown significantly as a business since entering into their software licence agreements.

If in doubt (and you knew this was coming, but it needs saying anyway!): talk to your lawyers to check you are within the terms of your licences, and certainly talk to them (and quickly) if the BSA comes knocking on your door.