Data has become an increasingly valuable commercial asset. Businesses collect, process, store, and exchange information through customer relationships, software platforms, partnerships, and vendor arrangements. As data becomes more central to business operations, contracts increasingly need to address who owns information and who may use it.
Disagreements can arise when multiple parties contribute to creating or maintaining a dataset. A customer may provide information to a service provider, while the provider processes and organizes that information using its own technology. Each party may believe it has rights to the resulting data.
Data ownership disputes often develop when commercial agreements do not clearly distinguish between ownership, access, licensing, and permitted use.
Ownership and Use Are Not Always the Same
One of the most important considerations in a data-related contract is recognizing that ownership and usage rights are separate issues.
A business may retain ownership of information while allowing another company to access or process it. A vendor may have permission to use data to provide contracted services without receiving unrestricted rights to exploit it for other purposes.
Contracts should therefore address more than who “owns” the data. They should explain what each party can do with the information during and after the relationship.
Relevant provisions may address access, processing, storage, disclosure, retention, deletion, and permitted commercial uses.
The Contract May Define the Parties’ Rights
Virginia courts generally look to the language of the agreement when determining contractual rights and obligations. For businesses sharing information, clear drafting can provide an important framework for resolving disagreements.
A contract might distinguish between customer-provided data, data generated through use of a service, and information independently developed by the vendor.
These distinctions can become important when a relationship ends. A customer may expect the return or deletion of its information, while a service provider may claim continuing rights to retain certain records or use aggregated information.
Defining these categories in advance can reduce uncertainty.
Data Generated During a Business Relationship
Some information is difficult to classify because it is created through the interaction between multiple parties.
For example, a software provider may generate analytics based on customer activity. A marketing company may develop insights from data supplied by its client. A business partnership may produce information that neither party possessed independently before the relationship began.
The contract should explain how these forms of information are treated.
Businesses may also need to distinguish between raw data and derivative information, such as reports, analytics, models, or aggregated datasets. The parties may agree to different rights for each category.
What Happens When the Contract Ends?
Data rights should not be addressed only during the active relationship.
Businesses should consider what happens when an agreement expires or is terminated. The contract may establish whether information must be returned, transferred, deleted, or retained for a defined period.
It may also address whether either party can continue using information that was generated during the relationship.
Clear exit provisions can help prevent disagreements after the commercial relationship ends.
When data ownership disputes arise, Jabaly Law helps businesses examine the agreements, contractual obligations, and circumstances surrounding the use and control of commercial information.
Our business attorneys handle data rights and commercial contracts, while our commercial litigation attorneys represent businesses in related disputes.
Companies can contact Jabaly Law to schedule a consultation today.
Frequently Asked Questions
Who owns data created by a customer using a third-party software platform?
Ownership depends on the nature of the data and the governing agreement. The contract may distinguish between customer-provided information, data generated through use of the platform, and analytics or derivative information created by the provider.
Can a business sell or license data it receives from another company?
Not necessarily. A business’s ability to commercialize or share data may be restricted by contractual terms, privacy obligations, intellectual property rights, or other applicable legal requirements. The specific source and nature of the data should be evaluated before it is transferred or monetized.
What should businesses do when a contract is silent about who owns newly created data?
They should review the entire agreement and the circumstances in which the data was created rather than assuming ownership automatically. Depending on the situation, the parties may need to clarify their respective rights through an amendment or separate data-use agreement.
