Law Times

Law Times • may 16, 2016 Page 11 www.lawtimesnews.com Canada catching up on cloud service agreements BY MARG. BRUINEMAN For Law Times C loud services are be- coming ubiquitous in our everyday world and businesses and organi- zations are quickly embracing their use. Key, however, are cloud ser- vice agreements, which have seen a rapid evolution in just the past few years. "I think that there's a lot of op- portunity in this space, which is why I'm in it," begins Lisa R. Lif- shitz, a partner in Torkin Manes' business law group, where she specializes in technology and privacy law. "There's continual evolution in this space. There's even more opportunity as clients become more comfortable in the way in which these arrange- ments occur." Canada is just catching up to Europe and the United States in the development of the agree- ments, which began, largely, as a one-way street in favour of the cloud service providers, says Lifshitz. Early on, users were presented with an agreement by the service provider, but increasingly, users found they had a voice and had the ability to negotiate. The scope of the deal and nature of the cloud agreement plays a role in the vol- ume of that voice, which has also increased with the introduction of more competition. Lifshitz says cloud users look- ing to enter into an agreement need to understand the nature of the data that they wish to put into the cloud as well as their needs from a business perspective. And from a contract perspective, is- sues include the scope of the agreement, representation and warranties, indemnities, the use of subcontractors, data protec- tion/ownership/use/location as well as data privacy and security, service levels/objective, termina- tion conditions, transition assis- tance, and exiting means/terms. The agreements may look simple, but they're often hy- perlinked to other documents, which usually includes an ac- ceptable use policy, service-level agreements, and a separate data processing/privacy policy. "It's really important for or- ganizations to understand all of the various inter-related cloud contract documents — no one should go just feet first," she says. "Not all vendors are created equal and not all cloud agreements are created equal. There are still bet- ter agreements than others in the marketplace." Different users have different needs that might be included in the agreement, like meeting cer- tain mandated regulations and security requirements or includ- ing audit rights. And those regu- latory/legal requirements should be ascertained at the start so they can be included in the agreement. Nadine Letson, senior corpo- rate counsel at Microsoft Canada, says that Microsoft's transition from a company that licenses software that is installed on a cus- tomer's premises to a company that now also provides software as a service has meant a change in the kind of advice she is asked to provide. Now that Microsoft is storing the data of thousands of its customers in its data centres, there is a new set of legal issues to be concerned about. "The transition has changed my job significantly. In addition to the typical issues that arise during the negotiation of a com- mercial contract for software li- cences, I now deal with security, privacy, and other regulatory issues that come with being the custodian of customer informa- tion," says Letson. Cloud service providers have realized that in order to be able to provide their services, they need to help their customers meet regulatory obligations, she says. Financial services institutions in Canada, for example, must ad- here to guidelines published by the Office of the Superintendent of Financial Institutions when they contract for certain types of cloud services. In Canada, British Columbia public sector privacy legislation requires that public bodies keep personal information within the country with very limited excep- tions. Microsoft is on the verge of opening its first two Canadian data centres from which it will provide cloud services — one in Toronto, the other in Quebec City — largely in response to gov- ernment customer preferences to maintain their data within Ca- nadian borders. And there are privacy con- cerns that also need to be ad- dressed worldwide. The Euro- pean Union has perhaps the most stringent privacy rules, says Letson. In order to help its EU customers comply with EU privacy law, Microsoft in- cludes the EU model clauses for transferring data overseas to its standard contracts for cloud services with its enterprise cus- tomers. The EU model clauses are contractual terms, that, when followed by both parties, are deemed to provide adequate protection for personal data be- ing transferred outside the Eu- ropean Economic Area. "Because that standard is high, we think, that certainly al- lows us to meet Canadian stan- dards," she says. LT FOCUS THE MOST COMPLETE DIRECTORY OF ONTARIO LAWYERS, LAW FIRMS, JUDGES AND COURTS. NEW EDITION Perfectbound Published December each year On subscription $80 One time purchase $83 L88804-764 Multiple copy discounts available Plus applicable taxes and shipping & handling. 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Untitled-2 1 2016-04-27 3:39 PM Course Leader Michael Ford, QC, Partner, DLA Piper (Canada) LLP Corporate Transactions: The Often Overlooked Employment Issues FULLY ACCREDITED IN-CLASS PROGRAM & LIVE WEBINAR Toronto, June 8 • Webinar, June 8 DON'T MISS OUT ON REGISTRATION To register and learn more visit www.lexpert.ca/cpdcentre THE PEOPLE ELEMENT OF CORPORATE TRANSACTIONS HUMAN RIGHTS LIABILITIES | PRIVACY OBLIGATIONS | WORKPLACE PITFALLS Untitled-1 1 2016-05-11 1:25 PM In addition to the typical issues that arise during the negotiation of a commercial contract for software licences, I now deal with security, privacy, and other regulatory issues that come with being the custodian of customer information. Nadine Letson

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