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Don’t let the lawyers run the business

This past weekend, my sysadmin ( James Sparenberg ) and I, were figuring out which cloud hosting service to use. We had been pitched a number of times by GoGrid. I had been given a “try us out” credit by the very pleasant sales person. I was going through the process of signing up.

  1. name (check)
  2. company (check)
  3. address (check)
  4. read the Acceptable Use Policy, Beta Agreement and the Terms of Service… uh, oh

Beta Agreement:

2.  You will not disclose any Confidential Information to a third party, including without limitation a GoGrid Competitor, or use it for any purpose other than to facilitate beta testing.  However, you may disclose Confidential Information to the extent required by law, provided you give GoGrid advanced notice reasonably sufficient to allow it to contest such disclosure.  “Confidential Information” refers to any information regarding the Service unless such information is: (a) provided at the GoGrid Website ( and made available to Internet users without an account or password; (b) already publicly known other than through your act or omission; or (c) made available by GoGrid to customers of the Service after beta testing and after the official public launch of the Service.

3.  You agree that violation of the provisions of this Beta Agreement might cause GoGrid irreparable injury, for which monetary damages would not provide adequate compensation, and that in addition to any other remedies available, GoGrid will be entitled to injunctive relief against such breach or threatened breach, without the necessity of proving actual damages.

Danger, Will Robinson, Danger. At GoGrid’s sole discretion, they can go after me for lots of money and high-legal fees. According to a strict reading of this agreement, my balance and usage information is GoGrid’s confidential information.

It gets worse with GoGrid’s Acceptable Use Policy

A. The following activities are expressly prohibited:
2. Intellectual property infringement, including violations of copyright, trademark, and patent rights, and use or distribution of pirated software.

B. Disruptions & security:
GoGrid may suspend Service in whole or in part if it reasonably suspects an AUP violation. Customer will reimburse GoGrid for any expenses resulting from Customer’s violation of the AUP, including attorneys’ fees. GoGrid may also disable Customer’s service if GoGrid suspects that such service is the target of an attack or in any way interferes with services provided to other customers, even if Customer is not at fault. GoGrid does not issue refunds for terminating service due to any of the causes above.

So if GoGrid gets any sort of DMCA notice, legitimate or not, GoGrid can decide to take company’s website offline without compensation. If an Amplafi user is abusing the service, GoGrid will shutdown our entire service.

This arbitrary exposure to business disruption is unacceptable. If any corporate officer agreed to these terms I would fire them.

GoGrid’s (unacceptable) Terms of Service:

4. Acceptable Use.

(ii) Notwithstanding any provision to the contrary in this Agreement, and without limiting any of GoGrid’s rights or remedies, GoGrid may suspend Service in whole or in part in the event that GoGrid reasonably suspects an AUP violation. Reasonable suspicion pursuant to the preceding sentence includes, without limitation, a third party notice or claim that Customer’s use of the Service infringes on third party rights. GoGrid will make reasonable efforts to notify Customer before any such suspension, unless the AUP violation calls for immediate action to prevent injury or liability, in GoGrid’s opinion and at its sole discretion. Suspension pursuant to this Subsection 4(a)(ii) may continue so long as GoGrid reasonably suspects an AUP violation. GoGrid is not liable for any Service suspension authorized by this Subsection 4(a)(ii), or for any related loss, even if the suspected AUP violation did not occur.

GoGrid will shutdown Amplafi’s website for any reason at all. “Reasonable effort to notify” is not defined and is highly subject to interpretation.

6. Maintenance & Security.
GoGrid is not responsible for providing physical access to or copies of software, data, or content stored on GoGrid’s equipment under any circumstances and is not required to provide network access (i) after any termination or suspension of Customer’s Service or (ii) in the event of hardware failure, abuse by hackers or other third parties, improper administration by Customer, or other interruption of network access.

GoGrid will shutdown an account for arbitrary reasons and then discard all customer data…. if this is a day that ends in a ‘y’.

8. Warranties, Disclaimers, & Limitations of Liability.

And you can’t do squat about it.

Sorry! No sale!

We decided to go with Rackspace.

Rackspace (reasonable!) Terms of Service

7. Law/AUP. You agree to use the Services in compliance with applicable law and our AUP, which is incorporated by reference in the Terms of Service. You agree that Rackspace may, in its reasonable commercial judgment consistent with industry standards, amend the AUP from time to time to further detail or describe reasonable restrictions and conditions on your use of the Services. Amendments to the AUP are effective on the earlier of our notice to you that an amendment has been made, or the first day of the next Renewal Term. You agree to cooperate with our reasonable investigation of any suspected violation of the AUP. In the event of a dispute between the parties regarding interpretation of the AUP, our commercially reasonable interpretation of the AUP shall prevail.

Wow! A ToS requires that the Customer be proactively notified!

8. Your Information. You represent and warrant to Rackspace that (i) all information you provide to Rackspace for purposes of establishing and maintaining the Services is accurate; (ii) if you are an individual, you are at least eighteen years of age; (iii) you will not use the Services for the development, design, manufacture, production, stockpiling, or use of nuclear, chemical or biological weapons, weapons of mass destruction, or missiles in any country listed in Country Groups D:4 and D:3 of Supplement No. 1 to Part 740 of the United States Export Administration Regulations, and (iv) you will not provide access to the Services to any person (including a natural person or government or private entity) located in or a national of embargoed or highly restricted country under United States Export Regulations, which include as of June, 2008, Cuba, Iran, Iraq, Libya, North Korea, Sudan, or Syria. You agree that Rackspace may, without notice and without liability to you report to the appropriate governmental authorities any conduct by you or any of your EUs that Rackspace reasonably believes violates applicable law, and provide any information that it has about you and your EUs in response to a formal or informal request from a law enforcement or government agency or in response to a formal request in a civil action that on its face meets the requirements for such a request.

Notice the last line, the request must be official — not just some sort of automated DMCA notice generated by a spambot in Hollywood.

12. Suspension/Termination.
(a) Suspension of Services. You agree that Rackspace may suspend the Services if: (i) Rackspace reasonably believes that the Services are being used in violation of the AUP; (ii) you fail to cooperate with any reasonable investigation of any suspected violation of the AUP; (iii) Rackspace reasonably believes that suspension of the Services is necessary to protect its network or its other customers, (iv) as required by a law enforcement or government agency, or (v) if the Card cannot be charged for payment in accordance with Section 5. You agree to pay a reasonable fee for reinstatement (“Reinstatement Fee”) following any suspension.
(b) Termination by You. The Terms of Service may be terminated by you at any time as long as all Fees then due together with unpaid Recurring Fees for the remainder of the Initial Term or the Renewal Term, as the case may be, are fully paid on the business day following the termination date.
(c) Termination by Rackspace. The Terms of Service may be terminated by Rackspace prior to the expiration of the Initial Term or any Renewal Term without liability as follows: (i) upon seventy-two (72) hours notice if you are overdue on the payment of any Fee; (ii) you materially violate any provision of the Terms of Service or the AUP, and fail to cure the violation within ten (10) days after receipt of a written notice from Rackspace describing the violation in reasonable detail in our sole discretion; (iii) upon twenty-four (24) hours notice if the Services are used in violation of a material term of the AUP more than once, or (iv) upon twenty-four (24) hours notice if you violate Section 8 (Your Information).

Notice the explicit difference between GoGrid’s termination policy and Rackspace. Rackspace says that they will suspend unilaterally. GoGrid goes right to termination. Rackspace explicitly lists out timeframes. Rackspace imposes a 10-day advanced written notification requirement upon themselves. Furthermore, Rackspace requires that the violation be material ( i.e. significant ) and repeated.

14. Confidential Information.
Information that is developed by a party on its own, without reference to the other’s Confidential Information, or that becomes available to a party other than through violation of these Terms of Service or applicable law, shall not be “Confidential Information” of the other party. Each party agrees not to use the other’s Confidential Information except in connection with the performance or use of the Services, as applicable, the exercise of its legal rights under these Terms of Service or the Order Form, or as may be required by law. Each party agrees not to disclose the other party’s Confidential Information to any third person except as follows: to its respective service providers, agents and representatives, provided that such service providers, agents or representatives agree to confidentiality measures that are at least as stringent as those stated in these Terms of Service; to law enforcement or government agency if requested, or if a party reasonably believes that the other party’s conduct may violate applicable criminal law; as required by law;
or in response to a subpoena or other compulsory legal process, provided that the disclosing party must give the other party written notice of at least seven days prior to disclosing Confidential Information under this subsection (or prompt notice in advance of disclosure, if seven days advance notice is not reasonably feasible), unless the law forbids such notice.

Wow, once again a reasonable time to hire legal talent to address a legal issue.

Rackspace Acceptable Use Policy:

Copyrighted Material
You may not use the Rackspace Cloud’s network or Services to download, publish, distribute, or otherwise copy or use in any manner any text, music, software, art, image or other work protected by copyright law unless:
• you have been expressly authorized by the owner of the copyright for the work to copy the work in that manner; or
• you are otherwise permitted by established copyright law to copy the work in that manner.
It is the Rackspace Cloud’s policy to terminate in appropriate circumstances the services of customers who are repeat infringers.

What a difference the lawyers can make! GoGrid’s ToS, AUP, and Beta agreement are completely one sided and read like some free consumer service, not something that should be entrusted with any serious business. Rackspace’s agreement is balanced. Gives everyone an opportunity to seek legal advice. And more importantly, treats the cloud services as running serious business applications.

Its worth noting that under GoGrid’s AUP, ToS and Beta agreement — Facebook, YouTube, and many other popular legitimate services would be shutdown.

No thanks, GoGrid.

Posted in amplafi, broken, starting a company.

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