Data Licensing: 9 Questions To Answer Before Obtaining Data from Third Party

Data forms a basis of any business. Be it a small-scale industry or a large organization with multiple branches spread across the globe, a highly reliable and accurate data is what brings their business to success. But from where do you get these vast quantities of compiled information? Most of the companies obtain it from third-party sources which collect as well as update the list based on the terms agreed on.

Among these sources, some are under the contract called as ‘data licensed agreement’ whereas some are under different categories. It can either be website terms of use, subscription agreement, outsourcing agreement, alliance agreement, purchase and sale agreement, or other commercial agreements. Since data licensing agreement is one of the widely used protocols and the most anticipated one, every business must know about its usage to avoid the problems associated with its misuse.

Some industries borrow the licensed data paying hefty amount without really understanding its terms of use and other aspects. Unfortunately, this ignorance leads to various dangerous issues such as license breaches, regulatory compliance failure, intellectual property violation, or privacy law violation. Hence advanced planning is necessary before buying data from any third-party sources. Otherwise, it will be difficult to identify the data usage, its consistency with the terms of the agreed license, and which in turn results in damaging your company reputation.

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Therefore, if you have any plans of licensing the data from third-party sources, you need to understand various parts of it which give you a better result when appropriately managed. We listed nine questions to answer before planning to finalize the data licensing service deal with a third-party. Once you know the answer to all these questions, you will know what data you need and how you can manage its usage wisely.

1. What are The Core Provisions of Data License Agreement?

The core provisions of data licensing define everything about the data that is authorized. It includes –

– The manner in which they offer the data.

– The frequency of updating the data.

– A format in which they provide the data to you.

– The way of delivering the data on a real-time basis or close to it.

– Also, the mechanism of delivery.

– The data encryption and other security measures.

– Software or hardware configuration requirement.

These provisions may vary based on what type of license your business uses.

2. Who is Permitted to Use the Data?

The data license agreement specifies different restrictions on data usage. That is the conditions on people who are permitted to use the data, or the devices on which one can use the data, or the limitations on the number of people or the tools that can use it. The licensee must know about these rules in advance and use it accordingly.

Besides, in large organizations, the data usage may not be restricted to one particular person. The other entities, affiliates, contractors, or sometimes the customers of the licensee may also require access to the data. Hence you must make sure whether it is permitted or the license you already purchased allows it to avoid unnecessary problems.

3. Is the Data License Exclusive?

In most of the cases, the third-party sources provide non-exclusive license agreement instead of exclusive ones. In the non-exclusive agreement, the licensor will have the same right as a licensee. And he can license the same data to other organization or third-party. Some companies may not like this kind of option since they want an exclusive right to all the data.

If you are one among them, you can opt for an exclusive license where the entire rights to data are given to the licensee and not allowing others including the licensors to access or use this data. One can also opt for a single license where the licensor cannot authorize the same data to other parties, but he can access or use it. Understand the type of license you need for your business and purchase accordingly.

4. What is The Purpose of Data License?

Some third-party sources provide you the data license only for a specific purpose. Without reading the clauses correctly, you may use it for external purposes that result in a license breach. Hence it is essential to know your data license to save yourself from future complications. For instance, using the hospital data, one can identify the patient’s history, report, survey, research, and other health-related activities. You cannot use it in the different domain which will lead to the violation of the law.

Therefore, if you are a licensee, it is your responsibility to seek the data usage information from the third-party and also ask them to include all the possible purposes of the data usage in the license agreement. It should consist of both the extent possible as well as potential future uses cases in it.

5. Is There Any Location Restriction?

Some organizations may operate in different countries across the globe. In such scenarios, it is necessary to know the location restriction mentioned in your data license agreement. For instance, some third-parties provide data licensing only to one specific country. That is, you can access, use, or store the data just in that particular region.

And if your company operates in the location other than the specified area in the agreement, you must make such points clear before itself. In such cases, you can go for the license that grants the licensee unlimited or worldwide access or storage option or ask the third-party to modify the permit based on your requirement.

6. What are The Privacy and Security Issues?

You must always know about privacy and security-related information before purchasing a data license from other parties. The importance of data protection laws such as GDPR and cyber security are increasing in almost every sector day by day. Hence you must clearly understand this area before taking further actions. The data license must address-

– Nature as well as the sensitivity of the data they provide.

– The steps the licensee can take to protect from any privacy or security issues.

– The potential liability of the licensee in case of the data breach.

7. Do the Licensor Provide High-Quality Data?

It is not always necessary that the licensed data is of high-quality and you can rely on it entirely. The licensor often specifies such information in the data license agreement under the disclaimer section. You can find such disclaimer especially when the data the licensor license the data to multiple users or the licensor is not providing the specific data type. We always recommend you to read all those information’s thoroughly before accepting it. In most of the license agreement form, you can find this information in the below-



8. What are My Rights Regarding Data License?

The licensees must know whether the licensors will provide all the right to the data or what are the restrictions on it. In most of the cases, the licensors will not give the licensee the broader powers to the data. Hence it is crucial for you to learn it before proceeding with the purchase. Also, you must seek to include information such as anticipated purposes and rights to it in the data license agreement beforehand.

Whereas, if your organization uses personal data, the licensors might have collected the data from various sources. You must make sure that the third-party sources represent as well as warrants that they have received consent from all the individuals to use their data. In case if any individual withdraws the approval, the licensor must let the licensees know about it and take the appropriate action.

9. What is The Term and Termination of My Data License?

In most of the cases, the licensor provides the data license for a limited subscription term. And the data will get destroyed or returned at the end of the specified duration. Since these data form a critical factor for your business operation, it is necessary to know the validity of your data license before itself.

The companies or its affiliates may use the data in various other systems, and it will be impossible to track down its usage in the later times. So, it is a good practice to learn about these limitations in advance. Sometimes the terms and termination specified in the data license agreement may not be sufficient for your business needs. In such cases, you may require a perpetual license to meet the company necessities.

Final Note

Now you know what the things you must take into consideration before buying the licensed data from others. Take some time to answer these questions or obtain the answer from the third-party. After you answer these nine questions, you will know what are your expectations from such data and how to use it wisely.

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