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Software is a vital business tool, and software licence agreements are essential legal tools to determine how customers can use software. These agreements define key terms and conditions under which you, the software provider, allow customers to use your software, including usage rights, restrictions, intellectual property protection, and liability. In light of the stringent data protection rules under the UK General Data Protection Regulation (UK GDPR), these agreements must also address privacy issues when personal data is involved. This is particularly important where a software provider acts as a data processor. This article explores critical privacy law issues to consider concerning software licence agreements.
How Do Privacy Law Issues Apply to Software Licence Agreements?
Privacy law issues in software licence agreements typically arise when you, as the software provider or owner, process personal data on behalf of your software licence customers.
This processing can occur in various contexts, such as when your software collects user information or stores customer data that you do not control but only process on the customer’s behalf.
For example, if your software includes a customer portal, it may store personal details such as individual names, contact information, and other personal information. Various legal rules will apply if you access this information on your customer’s behalf under the licencing agreement as a data processor.
In scenarios where your business processes customer personal data, ensuring compliance with data protection laws is crucial to avoid legal risks.
Why is Securing Customer Personal Data Important?
Securing personal data is a fundamental requirement under the UK GDPR rules.
Your business should implement technical and organisational measures to secure customer data. These measures may include encryption, secure access controls, and regular security testing. Encryption can ensure that data remains unreadable to unauthorised parties during transmission and storage. Secure access controls can restrict data access to authorised personnel only, while regular security testing identifies and mitigates potential vulnerabilities.
You should also implement and enforce data protection policies, conduct regular employee training, and establish incident response plans. Data protection policies provide guidelines on handling personal data securely. Regular training will help employees understand their responsibilities and the importance of data protection. Incident response plans enable swift action in case of a data breach. They can help minimise potential damage and ensure compliance with the UK GDPR’s breach notification requirements.
Regular audits of security practices help maintain data security. You should conduct internal audits and third-party assessments to ensure compliance with data protection laws and standards. These audits identify areas for improvement and verify that the measures effectively protect customer data.
This factsheet sets out how your business can become GDPR compliant.
You should be ready for potential customers’ questions about data security. If your software means you will be handling your customers’ personal data, they will need to conduct their own due diligence on your business to check how you will safeguard their personal information. Implementing robust security measures will help you keep your clients happy and satisfied that their data will be safe with your business.
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Should Your Software Licence Agreements Include Data Processing Terms?
When acting as a data processor, specific data processing terms must be included in your software licensing agreement.
Let us explore some key terms your licence agreement should include if you are a data processor.
Defining Roles and Responsibilities
Your software licence agreement should clearly state the roles and responsibilities of both parties in data processing. As the processor, you should state that you will process personal data solely according to the customer’s instructions, who acts as the data controller. This clarity will ensure compliance with the UK GDPR’s requirement that processors follow the controller’s instructions.
Specifying Types of Personal Data and Processing Purposes
It is essential to detail the types of personal data you process on behalf of the customer and the purposes of the processing. This can be set out in a section of your agreement, such as a specific data processing schedule.
Security Measures
Your agreement should specify the security measures implemented to protect personal data. These security measures may include encryption, secure access controls, and regular security testing. Depending on their risk appetite, your customer may heavily negotiate these terms.
Addressing Sub-processors
If you engage subprocessors, the agreement should define the terms governing these relationships. You will need to have a method for obtaining the customer’s written consent before engaging subprocessors and ensure they comply with the same data protection to safeguard personal data throughout the processing chain effectively.
If any personal data is transferred to countries outside the UK, additional and complex issues will arise, which you should seek legal advice on.
Providing for Data Breach Notification
Notifying the customer promptly of any data breaches is critical. This will allow them to comply with the UK GDPR’s requirement to notify the Information Commissioner’s Office within 72 hours of becoming aware of the breach if it is reportable. Your agreement should also state how you will support the customer in managing the breach and minimising its impact.
Setting Data Retention and Deletion Terms
Clearly defining data retention and deletion terms is essential. This is often a key customer query, as they must understand precisely how long you will process their personal data. For instance, will all personal data you access under the agreement be deleted as soon as the software licence terminates?
These are a few critical processing terms your software licence agreement must include. If you need support understanding which other terms are required or could be included to protect your business, you should seek legal advice from a data protection lawyer.
Key Takeaways
Securing and safeguarding customer personal data is a vital consideration for a software licence agreement. Securing personal data involves implementing robust technical and organisational measures, including encryption, secure access controls, and regular security audits to protect information from risk.
To ensure compliance with the UK GDPR, software licence agreements must include clear data processing terms if you act as a processor. These terms should define roles and responsibilities and the use of sub-processors. They should also contain provisions for data breach notification, and data retention and deletion terms.
If you need advice on data protection law issues and your software agreements, LegalVision’s experienced data, privacy and IT lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
1. How do you ensure the security of customer data under a software licence agreement?
To ensure the security of customer personal data, you must implement robust technical and organisational measures. These measures could include encryption, secure access controls, regular security testing, data protection policies, employee training, and incident response plans.
2. What data protection terms should be included in a software licence agreement if you are a processor?
Your software licence agreement must include mandatory data processing terms if you are a processor. These terms should define vital issues, such as which customer data you will process and how you will assist the customer in dealing with personal data breaches.
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