Navigating Software Licensing Agreements Dispute Between Indian SaaS Firms

Introduction: Legal Precision in a Digital Business Landscape

In the complex and highly competitive software-as-a-service (SaaS) environment, clearly defined software licensing agreements are not just recommended—they are vital. As Indian tech startups and enterprise software providers grow, legal disputes surrounding user rights, intellectual property, and contractual limitations are becoming more frequent.

This case study explores how TGCLegal, a full-service law firm in Kochi, Trivandrum, Calicut, Koratty, and major cities in India, with expertise in IT and business law, assisted an Indian SaaS firm in addressing a major licensing dispute with another Indian company. The matter involved access revocation, breach of licensing terms, indemnity disagreements, and arbitration complexity.

Although the law firm’s role remains discreet in this narration, its influence is reflected in the legal rigor, structured documentation, and compliance-driven solutions that protected the interests of the aggrieved party.

Case Overview: SaaS Access Revoked Due to Licensing Breach

The dispute arose between two Indian companies—one a SaaS product developer, and the other a corporate user that had subscribed to the software under an annual plan. The user company alleged that they had been wrongfully denied access to the licensed software after a new feature rollout. The SaaS company argued that the user had violated the software licensing agreement by exceeding user limits, reverse engineering specific modules, and failing to adhere to monthly reporting obligations.

Despite several informal attempts at resolution, both sides interpreted the agreement differently due to loosely defined usage terms, ambiguous indemnity clauses, and a missing arbitration mechanism with a clear jurisdictional forum.

What began as a licensing disagreement escalated into:

• Product access revocation
• Refund claims
• Allegations of IP misuse
• Unilateral contract termination
• Threats of civil litigation

Case Implications: Legal & Operational Impact of a Poorly Drafted Licensing Agreement

The incident had serious consequences for both parties. The user company suffered workflow disruption, customer dissatisfaction, and a loss of business continuity. Meanwhile, the SaaS provider faced damage to its reputation, potential data liability, and breach of trust in commercial circles.

Key legal implications included:

• Breach of Contract under the Indian Contract Act
• Violation of Implied Terms due to lack of precise license scope
• Inadequate Indemnity Provisions, exposing both parties to financial claims
• Lack of a standard NDA or a proper Business Confidentiality Agreement
• Absence of a robust arbitration clause and jurisdictional clarity
• Unclear refund, termination, and data exit policies

Had a professional technology lawyer been consulted in the early contract-drafting stage, many of these issues could have been preempted through a clear software licensing agreement and solid legal framework.

Legal Progress and Process Flow: From Conflict to Resolution

Upon legal consultation, a structured path was laid out by the client’s legal team:

1. Document Review & Risk Mapping

All signed agreements were analysed, including:

• Original software licensing agreements
• Trial extension email chains
• Communication about module usage
• Internal IT logs showing unauthorized actions

A significant finding was the lack of a Business Lease Agreement that governed any shared infrastructure or localized deployments of the software.

2. Legal Notice and Demand for Arbitration

A formal notice was sent, asserting that the user had violated the agreement by exceeding access limits and attempting to replicate backend functionalities. The notice included:

• Request for immediate data handover
• Reinstatement of access under revised terms
• Arbitration notice under a proposed mutually acceptable forum
• Cease-and-desist warning for continued IP misuse

3. Pre-Arbitration Negotiation

Despite initial resistance, both parties agreed to mediation with their respective dispute litigation lawyer teams. Expert guidance helped them:

• Recalculate fair license usage charges
• Discuss terms for a limited refund based on service lapses
• Frame a data privacy advisory service proposal for future protection
• The role of experienced legal professionals helped preserve the business relationship without full-blown litigation.

4. Drafting a New Agreement and Release of Liability

A revised software licensing agreement was drawn up with the help of an expert technology law advocate. Key features included:

• Well-defined scope of software access and concurrent users
• Detailed refund and exit policy with an indemnity clause
• General business partnership agreement for future collaboration
• Binding arbitration clause with clear jurisdiction in India

To reinforce business trust, the parties also signed a Business Confidentiality Agreement and renewed office space rental agreements to reflect updated infrastructure hosting terms.

Why SaaS Disputes Are Growing: Lessons from This Case

This case underscores a growing issue in the Indian B2B software space—SaaS providers are entering business relationships without professionally drafted software development agreements or comprehensive software licensing agreements.

The consequences?

1. Ambiguity in IP ownership
2. Unenforceable payment structures
3. Data privacy violations
4. Jurisdictional disputes
5. Unforeseen termination risks

Legal complexity only increases when agreements lack clarity on user limits, intellectual property, or access rights. Business owners may unknowingly accept terms that are vague, contradictory, or unenforceable—especially without the guidance of a qualified business attorney near me or through platforms that help you hire attorney online.

How Should Software Licensing Agreements Be Drafted?

An airtight software licensing agreement must go beyond standard templates. A qualified technology lawyer ensures that such agreements contain:

Scope of license: Who can use the software, and how?

• Duration and renewal: Automatic renewal, early exit, and escalation paths.
• Data ownership: Clear clauses around ownership, backup, and deletion.
• Limitation of liability: Protection against overbroad claims.
• Arbitration clause: Proper mechanism for conflict resolution.
• Refund policy: In case of downtime or revocation.
• Indemnity: Mutual responsibilities in case of third-party damage.

It’s also wise to integrate linked agreements like the Business Confidentiality Agreement, general business partnership agreement, and clear jurisdiction clauses that minimize litigation.

Conclusion: Partnering with Legal Expertise Is No Longer Optional

Software licensing is no longer a casual handshake—it’s a structured legal relationship that requires careful drafting, enforcement, and compliance. With data becoming the most valuable business asset, ambiguity in licensing terms can trigger not just disputes but long-term legal consequences.

This case study proves that without clear software licensing agreements, both parties—provider and consumer—can suffer reputational, operational, and financial setbacks. Businesses must proactively consult dispute litigation lawyers and digital law experts to create enforceable, fair, and forward-thinking legal structures.

Whether you’re drafting your first SaaS agreement or revising a product distribution contract, always find an attorney near me or hire an attorney online through a reputed law firm with expertise in technology law, software agreements, and business dispute resolution.