Take a look at this article; it's a great primer to get everyone started: 5 Key Considerations When Litigating Cloud Computing Disputes by Gerry Silver, partner at Chadbourne & Parke.
I agree with Silver who sums up the situation nicely when he says that "given the ever-increasing reliance on cloud computing, it is inevitable that disputes and litigation will increase between corporations and cloud service providers."
Understandably, both cloud users and cloud providers will want to dodge responsibility for cloud outages. "The corporation may be facing enormous liability and will seek to hold the cloud provider responsible, while the cloud provider will undoubtedly look to the parties' agreement and the underlying circumstances for defenses" [source].
Looks like the future is bright for attorneys who specialize in cloud issues. After all, a faulty power supply or software glitch could lead to years of court battles.
Five Legal Elements
Silver outlines five key elements for the legal team to consider:
- Limitation of liability written into service contracts.
- Whether the Limitation of Liability clause can be circumvented: can the cloud provider be held responsible despite this clause?
- Contract terms: A breach of contract on either side can greatly affect litigation outcomes.
- Remedies: During the crisis the corporation could demand that the cloud provider takes extraordinary steps to restore systems and data.
- Insurance and indemnification: Insurance may cover some losses, and a third party may bear some responsibility for the problem too.
The Disturbing News: Expectations are Low
In my travels, I am still surprised at how little thought goes into the liability associated with an outage whether it be in a data center, cloud or hybrid configuration. Although I embrace everyone’s motivation to move to the cloud, I found a couple of points in Silver's article disturbing because they shed light on the obsolete way the tech industry thinks about cloud architecture as it relates to disaster prevention.
1) Just how much foresight is a cloud provider legally expected to have? In the section titled "May the Limitation of Liability Clause Be Circumvented?" Silver describes how "one court recently sustained a claim of gross negligence and/or recklessness in a cloud computing/loss of data case because it was alleged that the provider failed to take adequate steps to protect the data." This raises the question of what constitutes "failure to take adequate steps". Does it mean that the provider did something genuinely negligent like setting up a system with multiple single points of failure? Were they culpable because they had followed best practices and relied upon an industry-standard failover-based recovery system which later failed? Or did they fail to seek out (or create) the most advanced and reliable proactive business continuity system on the planet? Whatever they were using probably seemed good at the time but was clearly not adequate because it failed to protect the customer's data.
I would speculate that a customer’s lawyer would have a pretty high expectation of what "adequate steps" are, but as you will see in my next point the bar is still set pretty low.
2) The expectation is that cloud providers will be using failover, which is 20 years out of date. In the same section, Silver asks "Were back-ups of data stored in different regions? Were banks of computers isolated from one another ready to take over if another zone failed?" This without doubt describes a failover system. Apparently his expectation is that a cloud provider should follow current best practices and use a failover disaster recovery system. But the failover technique was designed decades ago for systems that are now extinct or nearly so. The latest networks are radically more sophisticated than their forebears and consequently have radically different requirements. Even a successful failover is a perilous thing, and failovers fail all the time. If they didn't, Mr. Silver would probably not have found it necessary to write this article. Backups happen only on fixed schedules so the most recent transactions are often lost during a disaster. You can expect legal battles over downtime and data loss to continue because cloud providers and their customers are all using one variation or another of these outdated disaster recovery techniques. So how can a disaster recovery system that is so prone to disaster be considered an "adequate step?"
Like I said, you'd better call a meeting with your legal counsel and get ready.
No Outage, No Litigation
ZeroNines can actually eliminate outages. Our Always Available™ technology processes all network transactions simultaneously and in parallel on multiple cloud nodes or servers that are geographically separated. If something fails and brings down Cloud Node A, Nodes B and C continue processing everything as if nothing had happened. There is no hierarchy and no failover. So if this cloud provider's service does not go offline there is no violation of SLAs and no cause for litigation.
Our approach to business continuity is far superior to the failover paradigm, offering in excess of five nines (>99.999%) of uptime. It is suitable for modern generations of clouds, virtual servers, traditional servers, colocation hosting, in-house servers, and the applications and databases that clients will want to run in all of these.
So my message to cloud providers is to check out ZeroNines and Always Available as a means of protecting your service from downtime and the litigation that can come with it.
My message to cloud customers is that you can apply ZeroNines and Always Available whether your cloud provider is involved or not. After all, your key interest here is to maintain business continuity, not to win a big settlement over an outage.
And heads-up to the lawyers on both sides: We are setting a new standard in what constitutes "adequate steps".
Visit the ZeroNines website to find out more about how our disaster-proof architecture protects businesses of any description from downtime.
Alan Gin – Founder & CEO, ZeroNines
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