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This article is authored by Kshitij Kothari, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from Lawsikho.com.

Introduction

In this contemporary world, Information Technology (IT) has become the ongoing process within the current statics of economy. Every business operation and communication is handled through a regular changing computing environment. Information Technology in the main refers to something associated with computing technology that is used for creating, processing, securing, exchanging, and storing all types of electronic information in any computer, storage, networking, and different physical devices. For example, the information of each employee of a Multinational Company (“MNC”) has a separate database which is stored in a computer. Therefore when the business and technical owners of an Information Technology company (like Infosys, Tata Consultancy Services, Systango, etc.) (“Service Providers”) grants their services to the organizations and other companies (Customers or Consumers or Clients) in creation, management, and improvement of or access to data and business processes; it means that the Service Providers are stepping into a contract with these corporations to be bound by the certain terms and conditions which are agreed between the parties upon negotiations. 

Essential provisions

Definitions and Interpretation

This clause is very important in any form of contract and particularly in Information Technology Services Agreement where usage of various technical words are involved and also the parties (the Service Provider and Customers or Consumers or Clients) may interpret the meaning of those specific terms in different manners. Therefore, a ‘Definitions and Interpretation’ clause is of great importance. For example, the word, “Customer Data” may embody varied interpretations such as; customer’s personal information, reports, Intellectual Property Rights of that customer, or anything of that stuff. Therefore, through these different interpretations, the parties may get confused as to what “Customer Data” may refer to and which may result in disputes between the parties and might eventually result in the termination of the agreement. 

Term Period

The Parties ought to fix a selected fundamental measure that the agreement ought to be enforced. The Parties along with the Term Period should also mention a clause of Termination, where the Parties can specifically relay on what grounds do the agreement expires apart from the lapse of the Term Period. Therefore the draftsperson should specifically mention a clause for the term period as to how long the parties would like the contract to remain in existence with certain prerequisite conditions if necessary. 

Data Privacy

Performance of services under ITSAs may entail the revelation to the Service Provider of in-person classifiable data from the database. In these types of agreements, the draftsperson shall provide a clause for privacy and the Service Provider shall make it clear that the Service Provider will use the database only for the specific purpose of fulfilling its obligations under these agreements. Service Provider shall not disclose the information stored in the database or share any information with any other party or for any other purpose without the prior written consent of the Client or the end-user. Furthermore, the Service Provider shall also not use such information for its benefit except as necessary to fulfill its specific obligations under these agreements. The obligations of the Service Provider shall also apply to any subcontractors or agents to whom Service Providers may release information stored in the database to perform certain services under these agreements. There shall also be a clause where the Service Provider shall return or certify destruction of all the information (including that provided to or obtained by its subcontractors or agents) upon the termination of ITSA.

Service Providers shall also provide access to Client’s information solely to those Service Provider employees, subcontractors, and agents who need to access the information to satisfy Service Provider’s obligations under these agreements.

Security Incident Response

The Client or Service Provider, upon becoming aware of any unauthorized access to any Date stored in Client’s database, or unauthorized access to such database which can reasonably be expected to result in loss, disclosure, or alteration of the stored information be deemed to be secured. These all unexpected situations are known as Security Incidents. The Service Provider shall on time apprise and make the Client aware and shall also investigate the Security Incident and provide Client with detailed information regarding the Security Incident, also take reasonable steps to mitigate the results and to attenuate any harm resulting from the Security Incident; take prompt and appropriate corrective action geared towards preventing the recurrence of an analogous Security Incident in the future, and hold Client harmless from any costs related to an information breach due to the actions or inaction of Service Provider.

Transition services

Cooperation with customer third-party suppliers 

The term Customer Third Party-Supplier means the person who is availing the services of Service Provider and is transferring to the end-users. They are responsible for lending services to the end-users. For example, Government Law College (GLC) has an agreement with Tata Consultancy Services (TCS) to provide software where the GLC can store all the information of the students and provide them online facilities to pay the fees, issue a book, access examination reports. Therefore, with all these facilities, TCS comes up with software that can provide these facilities.

Now here the GLC will act as a “Customer Third Party-Supplier” who have supplied the services to the students through the platform of TCS and if in the event students are not able to access any of the facilities above mentioned GLC will have the duty to inform the same and rectify those grievances in a limited period. Therefore, the Service Provider has the duty of assuring the completion of grievances faced by the Clients including assisting end-users in connection with any requests for proposal for Customer Third Party Suppliers to provide services to Clients (such as, by providing to Clients information related to such services to enable Clients to draft a request for proposal relating to such services). 

License and proprietary rights 

In these types of agreements various inventions and developments are made by the parties. Therefore the draftsperson shall make it clear that which party will be the owner of those inventions. However, it is a followed practice that the Client shall own all data, information, and other work product developed or obtained by Service Provider, but it is not obligatory and this clause shall be based upon the negotiations between the parties. 

In various agreements, there is a clause related to the ‘all times access’ which means that all ongoing works of Service Provider for purposes of inspecting the same and determining those works are being performed per the terms of the Agreements. Immediately upon termination of these agreements for any reason, all such data, information, and other work, in whatever form, is turned over to the Client. The parties also have the leverage to agree upon all rights including all intellectual property rights in and to data and information provided by Client or on behalf of Client or created by Service Provider in the performance of services shall remain the exclusive property of Client. Service Provider has a limited, nonexclusive license to use such data and information solely to perform its obligations under ITSAs.

These agreements do not give the Service Provider any rights, implied, or otherwise, data, information, or intellectual property, except as expressly stated in these agreements subject to negotiations. For these agreements, any copyrighted work (“Work”) developed in the course of performance by Service Provider under these agreements are usually deemed, ‘work made for hire’ under the Copyright Act 1957, and all ownership rights to such work are vested to Client. Any patentable invention conceived or reduced to practice in the course of performance, under these agreements are mainly the property of the Client. The client has the right to secure patents, reissues, and extensions of thereof in India or any other country. Whether copyright or patent in the Work will be maintained or registered in India or any other countries shall be at the sole discretion of Client. Service Provider agrees to cooperate fully with Client in the preparation, and execution of all documents necessary or incidental to this assignment, and the protection and preservation of rights herein granted to Client. 

Conclusion

Information Technology Service Agreement is drafted between various organizations around the world. These agreements have become a backbone where the individuals are receiving services from the IT Companies. Nowadays, in every sector, we will see the necessity of these agreements. There are various clauses such as Service Locations, Records Management, Confidential Information, Representations, Warranties and Covenants, Dispute Resolution, etc., which are essential for any draftsperson to encapsulate these aforementioned clauses in these types of agreements. 

With the world pacing towards technology, artificial intelligence, and digitalization, the parties need to initiate these agreements because in these sectors the main role is played by Information Technology and it is evident that the scope of these agreements will take up its progress. Information Technology seems to be fancy but has increased the unemployment rate. While I was writing this article, I read a news headline where Boeing Co. from April 2021 will outsource a significant amount of information technology service work to Dell which contains the support of cloud services, databases, and other services related to information technology that will result in eliminating around 600 jobs. Even so, it is evident that information technology is of great importance but individuals should not forget the need for manpower and human brains that are so essential that they shall not link with artificial intelligence. 


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