When Alice Leaves Software in Wonderland: Review the Terms of Use

That least-read contract — the Terms of Use (ToU) — can be an effective (albeit the last) weapon in the arsenal of a company trying to protect unpatented software technology while providing on-line services. In particular, a Software as a Service (SaaS) company may need to rely on its user license agreement or ToU to protect against theft of its technology by competitors posing as customers. Importantly, as discussed below, the ToU can support injunctive relief just as is available for patent infringement. Furthermore, even where individual components of the SaaS product are otherwise publicly available, or known in the art, a ToU contract protecting the proprietary combination of such components in the product as a whole will be enforced. See, Aronson v. Quick Point Pencil Co., 440 U.S. 257, 99 S. Ct. 1096 (1978) (enforcing contractual obligations freely undertaken at arm’s length to continue to pay royalties on unpatented publicly available product).