Software escrows work in much the same way as any other escrow: the software is given to a third party – known as an escrow account – which allows businesses to keep their software codes and data secure and protected. Software escrow is essentially a form of intellectual property management – similar to a patent or copyright. It ensures that the software continues, over a period of time, to be maintained and operated, even if the original licensor fails to do so, due to, for example, bankruptcy, by allowing the licensee access to an up-to-date copy of the software in this event – but, to protect the rights of the developer, only in an event such as this.
Therefore, in some ways a software escrow contract can be likened to an insurance policy. It ensures that there is a trusted third party to keep a hold of the software code; one which will release it to the licensee only in a case such as is mentioned above, when specific, pre-defined conditions are met. The licensor – the creator of the software – can rest assured that their software will be protected at all other times. The licensee, on the other hand, is assured that, in a disastrous situation such as is mentioned above, they will still have access to the software, even if the creator of the code can no longer support it. As many software programmes and source codes are vital for the daily running of businesses, this is an important agreement to reach.
Source code or software escrow agreements must be detailed and are provided by an agent of an escrow account. Usually, the escrow account will be of a business which is dedicated to running such accounts and providing such services.
An escrow agreement outlines several conditions, including:
· The subject – that is, what the escrow is covering. In the case of a software escrow, this will be the code of the software. The scope of the subject should also be defined within the escrow: what documentation, specialised hardware or software tools are required to maintain the source code completely independent of its creator?
· Conditions of release – this is, arguably, the most vital part of the escrow; it defines under what conditions the source code can be delivered, wholly, to the licensee. Usually, these conditions include such incidences as bankruptcy (as mentioned above), cancelling a development project and expressed unwillingness from the licensor to maintain the source code as outlined in the contract.
· Up-to-date versions – this ensures that the developer provides the escrow with up-to-date versions of the source code at specified intervals.
· Escrow services – this outlines any additional services provided by the escrow company. For example, certain escrow agencies may create software based on a source code to certify features will work with the binary used by the licensee or they may ensure that the storage media for the source code is readable.
· Fees – the fee due to the escrow agent for service as a third party.
Information Management Company Services
Software escrow services can be obtained from information management companies, which provide a single point of contact, a friendly face and a helpful manner, to help companies with any and all escrow requirements. They also provide both parties with helpful advice and customised plans for every one of their clients.
Information management companies will provide clients with assistance throughout all stages of the process of creating an escrow account. This will include a tailored system of planning, practice and implementation, in order to ensure that the client maintains their required level of control in the project and that their interests are always topmost priority and treated as such. Most information management companies will also provide the client with a user-friendly escrow system which includes online tools for paying and deposition as well as deposition verification. Real-time management is also provided with this online tool, allowing clients to have easy and secure access to the escrow account.