Rights and contracts
Security schedules in data licenses: controls to require from buyers
By SourceX Editorial · Reviewed by Noah Loul ·
Short answer
Security requirements in a data license agreement belong in a security schedule naming the controls a buyer must operate while it holds your records. Require twelve: named access, strong authentication, encryption in transit and at rest, segregation, location limits, no onward copies, logging, hardening, incident notice, certified deletion and evidence rights, each paired with proof.
Key takeaways
- A security schedule turns a general promise to protect data into named controls a buyer can be measured against.
- Licensed records leave your systems, so the schedule must follow every copy, including staging areas, preprocessing and backups.
- Ask for independent evidence, such as a SOC 2 Type 2 report with the right scope, not a questionnaire alone.
- Deletion terms should cover backups and working copies and end with a signed certificate.
- A buyer's standard supplier addendum protects the buyer's systems, not your licensed records, so replace it.
What a security schedule does in a data license#
A security schedule is the exhibit to a data license that lists the specific controls the buyer must operate over licensed records for as long as it holds them. The license grant says what the buyer may do with the data; the security schedule says how the data must be protected while it does.
The schedule carries more weight in data licensing than in a typical software purchase, because the records physically leave your environment. Once support tickets, CRM histories or maintenance logs sit in a buyer's training pipeline, your only levers are the contract and the evidence the buyer agrees to provide.
Security terms also protect your legal position. Under the Defend Trade Secrets Act, information is a trade secret only if its owner takes reasonable measures to keep it secret, and DOJ guidance lists need-to-know access and confidentiality agreements among reasonable measures. Enforceable controls in the schedule are part of showing those measures.
The twelve controls to require from buyers#
The twelve controls below cover access, encryption, segregation, logging, deletion and incident notice. Each row pairs the requirement with evidence you can actually request, so the schedule can be checked rather than just signed.
Keep requirements outcome-based. Naming a specific product invites exceptions, while a requirement such as encryption at rest with separately managed keys can be met many ways and is still testable. Location terms can also travel with the dataset's documentation: the Data and Trust Alliance's Data Provenance Standards include allowed and excluded processing and storage geographies as dataset metadata.
| Control | What to require | Evidence to ask for |
|---|---|---|
| 1. Named access | Access only for named roles with a need to know, reviewed on a set cycle | Current access list on request |
| 2. Strong authentication | Multi-factor authentication and single sign-on for every account that can reach the data | Policy excerpt or officer attestation |
| 3. Encryption in transit | Current TLS or equivalent for every transfer, including moves between internal environments | Architecture description |
| 4. Encryption at rest | Stored records and backups encrypted, with keys managed separately from the data | Key management summary |
| 5. Segregation | Licensed records held in a dedicated, labeled environment, not mixed untagged into a shared data lake | Environment diagram |
| 6. Location limits | Storage and processing only in agreed countries or cloud regions | Region list and notice before any change |
| 7. No onward copies | No transfer to affiliates, contractors or subprocessors without consent and flow-down terms | Subprocessor list |
| 8. Logging | Access and export logs kept for an agreed period and produced on request | Sample log extract |
| 9. Hardening | Patched systems, vulnerability management, no copies on unmanaged devices | Recent penetration test summary |
| 10. Incident notice | Notice of suspected unauthorized access within an agreed window, with cooperation duties | Incident response plan summary |
| 11. Deletion | Deletion of records, backups and working copies at the end of term or on termination | Signed certificate of destruction |
| 12. Evidence and review | Annual attestation plus a right to updated reports or a targeted review after an incident | SOC 2 Type 2 report or ISO/IEC 27001 certificate, with scope |
- 01Your work records
- 02Personal details removed
- 03You approve the release
- 04Licensed to AI developers
Where licensed training data is harder to protect#
Licensed training data is harder to protect than ordinary vendor data because AI pipelines multiply copies. A raw export lands in a staging bucket, gets cleaned and deduplicated, is split into training and evaluation sets and is converted into tokenized shards. Every one of those is a copy of your records under the license.
Ask the buyer for a copy map that names each environment where licensed records, or files built directly from them, will live, who controls it and how it is deleted. Then make every control in the schedule apply to all of them, not only to primary storage.
Be precise about trained models. Many licenses treat learned model weights differently from stored records, so decide with counsel whether deletion covers datasets only or also creates obligations for models trained on them.
- Landing or staging storage for raw deliveries.
- Cleaning, deduplication and labeling workspaces, including any annotation vendor.
- Training, validation and evaluation splits.
- Tokenized or embedded versions of the records.
- Backups and disaster recovery copies.
- Analyst extracts, notebooks and sample files.
How to word incident notice and deletion terms#
Incident notice terms should define the trigger, the clock, the content and the cooperation. A useful trigger is suspected or confirmed unauthorized access to licensed records, not only a confirmed breach, because confirmation can take a long time.
Set the notice window with counsel as a fixed number of hours or days, and require the notice to state which records were involved, what the buyer has done and who the contact is. Add duties to preserve logs, to support your own notification obligations and to bear the costs the incident causes. State breach laws may require notice to individuals when personal information is involved, so the buyer's notice must reach you in time.
Deletion terms should name the triggers (end of term, termination, a schedule expiring, a written request after an incident), the scope (records, backups, working copies), a deadline and a certificate signed by an officer. Where backups cannot be purged at once, require that they stay encrypted, are never restored for use and expire on their normal cycle.
What evidence should a buyer provide?#
A buyer should provide independent evidence that its controls exist and work, not only a completed questionnaire. The most common evidence is a SOC 2 report. SOC 2 examinations use the AICPA Trust Services Criteria, which cover security, availability, processing integrity, confidentiality and privacy, and a Type 2 report also tests whether controls operated effectively over a period.
Check scope before relying on any report. A SOC 2 report for a buyer's commercial product may not cover the research cluster where training data actually lives, so ask which systems the auditor examined.
| Evidence | What it shows | Watch for |
|---|---|---|
| SOC 2 Type 2 report | Controls tested over a period by an independent auditor | Whether the training environment is in scope |
| ISO/IEC 27001 certificate | A certified information security management system | Certificate scope and statement of applicability |
| Penetration test summary | Recent testing of exposed systems | Date, scope and whether findings were fixed |
| Security questionnaire | Practices as the buyer describes them | Answers are not independently tested |
| Officer attestation | A named person stands behind the controls | Tie it to this specific schedule |
Illustrative: a software company rewrites the buyer's addendum#
Illustrative: a fictional vertical software company serving property managers plans to license support conversations from Zendesk, linked to the Jira issues and fixes they produced. The buyer's first draft attaches its standard supplier security addendum, written for vendors that connect to the buyer's own systems.
The CTO sees that the addendum protects the buyer's network, not the licensed records. It asks the software company for background checks and its own controls, but says nothing about where the tickets will be stored, who can read them or how they will be deleted.
The CTO replaces it with a licensed-data schedule: a named cloud region, named roles, no laptop copies, a copy map, a notice window set with counsel and a deletion certificate that covers tokenized shards. The buyer accepts most terms and supplies a SOC 2 Type 2 report after confirming its training environment sits inside the report's scope.
Common mistakes in security schedules#
Most security schedule problems come from templates written for a different relationship, such as a SaaS vendor addendum or a buyer's supplier terms. Read every draft from the position of a licensor whose records are leaving the building.
- Signing the buyer's supplier addendum, which runs in the wrong direction.
- Accepting phrases like industry standard security with no named controls behind them.
- Covering primary storage but not staging areas, annotation vendors or backups.
- Taking audit rights with no remedy, such as suspended deliveries, if a control fails.
- Leaving deletion undefined for working files and derived copies.
- Letting the schedule lapse at termination instead of surviving until deletion is certified.
How SourceX approaches security terms#
SourceX reduces what needs protecting before a security schedule is negotiated. In the Preparation step of the SourceX five-step transaction (Supply, Rights, Preparation, Approval, Delivery), personal and confidential details are removed, so the licensed package carries less exposure if a control ever fails.
At Delivery, large datasets stay in the supplier's own storage or ship on encrypted drives, and SourceX never hosts multi-TB datasets. The SourceX Evidence Packet records permitted use and release authorization alongside provenance and the privacy record, so supplier and buyer work from one record of what was approved.
Frequently asked questions
Should the security schedule be separate from the data processing addendum?
Usually yes. A data processing addendum addresses personal data and each party's role under privacy laws. The security schedule covers every licensed record, personal or not, including confidential business records. Cross-reference the two so the stricter term applies where they overlap.
Can a smaller supplier realistically audit a large AI buyer?
Rarely in person, and it seldom needs to. Ask for independent reports, officer attestations and the right to a targeted review after an incident. The protection comes from written commitments backed by evidence and a remedy, such as suspending further deliveries, if a commitment is missed.
Do these controls change if the buyer only accesses data in our environment?
Partly. When records never leave your systems, encryption, location and deletion terms matter less, while access, logging and export limits matter more. Specify that the buyer may not export raw records, and define which model outputs, metrics or weights it may take away.
Who should negotiate the security schedule?
The CTO or security lead should own the technical content, with counsel drafting remedies and the link to liability caps and indemnities. Involve the CFO if a control failure would suspend payments or trigger refunds, so the money terms and the security terms agree.
What remedy should a failed control trigger?
Common remedies include a duty to fix within an agreed period, a right to suspend further deliveries, and termination with certified deletion for serious failures. Whether losses from a security failure sit inside or outside the liability cap is a negotiated point, best decided alongside the indemnity terms.
Sources
- Under 18 U.S.C. 1839(3), information qualifies as a trade secret only if the owner has taken reasonable measures to keep it secret and it derives independent economic value from not being generally known. Source
- DOJ guidance states that trade secret protective measures need not be absolute but must be reasonable, citing examples such as limiting access on a need-to-know basis and requiring confidentiality agreements. Source
- SOC 2 examinations use the AICPA Trust Services Criteria covering security, availability, processing integrity, confidentiality and privacy, and a Type 2 report also tests whether controls operated effectively over a specified period. Source
- The Use group of the Data and Trust Alliance Data Provenance Standards includes elements for allowed and excluded processing and storage geographies. Source
Related resources
- DataSales call transcripts
- QuestionData licensing vs data selling: what's the difference?
- QuestionCan I audit how my data is used?
- InsightWhat if the buyer misuses my data?
- InsightIf AI training is fair use, why do buyers still license data?
- InsightData provenance standards: the metadata fields buyers now expect
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