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Microsoft v. Salesforce.com ? Taking the Fight to the Cloud

By Stephanie Robinson

On June 24, 2010, Salesforce.com filed suit against Microsoft in a Delaware Federal court claiming Microsoft willfully infringed five Salesforce.com cloud computing-related patents. This is an apparent counter to a May 18th suit filed by Microsoft accusing Salesforce.com of patent infringement. Though Salesforce.com and Microsoft promote slightly different cloud computing models, each company claimed the patents infringed were significant components to their platforms, signifying that the fight over cloud market controls is ramping up. While the choice between pursuing a pure (Salesforce.com) versus hybrid (Microsoft) cloud computing platform certainly requires a thoughtful business decision; a choice in either direction involves identical legal issues. For instance, data security regulations must be addressed in either case. Companies in the healthcare industry are by now quite familiar with these requirements and with related demands on their third-party vendors, but data security regulations such as the recently enacted Massachusetts privacy law are implicating companies and industries that have not had the pleasure of interpreting statutory data security requirements. As a result, many of these companies may be unaware of the extent to which cloud computing agreements must address and protect the company with respect to all data-related regulatory requirements. Cloud computing platform agreements also must meet the needs of companies to locate, preserve and cull data to meet electronic discovery requirements. As more companies adopt cloud computing platforms to house not only e-mail, but other business records, courts increasingly will require companies to implement litigation holds and production from cloud sources in a manner identical to that which companies currently perform on their internal networks. When evaluating a cloud computing platform, take time to carefully review the agreement in as much detail as your business and IT decision-makers do when looking at software functionality. A cloud platform that is technically sound and functional remains a serious liability if the service agreement does not address these and other critical legal issues associated with cloud computing. When in doubt, seek the advice of an attorney who is knowledgeable regarding legal issues surrounding IT service providers.

Full post as published by Business and Technology Law on July 08, 2010 (boomark / email).