Amazon Web Services has quietly dropped a controversial provision from its user agreement that essentially forced customers to agree that they could never file a patent infringement lawsuit against the public cloud vendor.
Follow-Up: Amazon Web Services adds IP protection while dropping controversial patent clause from user agreement
The clause in the basic user agreement raised a lot of eyebrows back in 2015 after AWS asserted it as a possible defense in a patent lawsuit filed by Appistry, a former AWS customer that sued the cloud vendor over high-performance computing patents. Until sometime around February 2017, Section 8.5 of the basic agreement for using AWS included this sentence:
During and after the Term, you will not assert, nor will you authorize, assist, or encourage any third party to assert, against us or any of our affiliates, customers, vendors, business partners, or licensors, any patent infringement or other intellectual property infringement claim regarding any Service Offerings you have used.
This language appeared to give AWS the right to deflect patent lawsuits filed by current and former customers — no matter the amount of services they had used during their business relationship with AWS — until the end of time. Depending on how a court interpreted the clause, this could have allowed AWS to expand into virtually any customer’s market without having to worry if it was violating patents, and prevent customers from asserting their patents against a hypothetical suit filed by AWS.
Needless to say, some customers weren’t crazy about this clause after it was brought to light. Like most of us, a small startup (or even a big company) doesn’t necessarily read all the terms and conditions before signing up for a service, and this clause struck legal experts as particularly harsh compared to a normal enterprise software vendor-customer relationship. Microsoft and Google don’t appear to have anything close to such a requirement in their cloud customer agreements.
In the latest versions of the Amazon Web Services agreement, that language is gone, and it doesn’t appear that there’s any new language that would cover the same territory. The word “patent” doesn’t appear in the new agreement at all.
Around the same time that Amazon dropped the clause, Microsoft announced plans to let its cloud customers actually use Microsoft’s array of patents in their own defense should they find themselves on the wrong end of a lawsuit. It’s not hard to imagine Microsoft cloud sales people in competitive sales situations pointing to its Azure IP Protection policy while highlighting a clause in Amazon Web Services’ agreement that implies you can never assert patented technology against it.
AWS last updated its user agreement on March 31, according to its website. No details were provided for those changes, but as of Feb. 16, the clause was still present, according to the Wayback Machine’s archives.
An AWS representative declined to comment on the new language in the agreement.
In the end, even though AWS technically listed the clause as a defense in the now-settled patent case with Appistry, it never used it as a primary argument against a current or former customer: Appistry’s patents were ruled invalid. But dropping it entirely is a sign of good faith toward its existing customers, who are being courted left and right by Microsoft, Google, and a host of other cloud and enterprise software companies. The public cloud is becoming more competitive, and Amazon is even facing pressure from its retail rival Walmart, which is discouraging its own suppliers from using AWS for their services.
As competition heats up, assuring your customers that you no longer reserve the right to walk all over their patented businesses seems like a wise move.
(Editor’s note: This post was updated Friday to clarify how Amazon used the clause at issue in its case against Appistry.)