What is Software Escrow?
Escrow is an ancient legal term referring to a deed which only becomes effective upon the occurrence of a future event. This term has been applied to the deposit of source code, by the software owner, with an independent third party, known as the ‘escrow agent'. The escrow agent holds the source code according to the terms and conditions set out in a tripartite (three party), escrow agreement between the agent, owner and the software user. The agreement details the circumstances in which the source code may be released to the user—usually the bankruptcy or liquidation of the owner, or the owner’s failure to carry out agreed maintenance procedures which could leave the user’s system unsupported.
What protection is given to the user?
An escrow agreement gives the users the right to access source code where a triggering event has occurred. The owner cannot remove the source code from the escrow agent without the user’s consent. The user may only use the code for the purposes for which it was originally purchased. The deposit media needs to be checked to make sure it is readable and that it contains accessible source code. This check on deposited materials—or verification—is a key process for ensuring the integrity of material which may receive no other scrutiny until called for at a critical time. The results of this independent verification has important implications for improving the work done by the supplier and the products delivered to acquirers.
What kind of software should be put into escrow?
Not commodity software such as standard office-type packages. Included are applications which drive the business and would put that business at risk should they fail. A good example would be a specialist financial application that stored and processed information across the enterprise. If that stopped working correctly, the whole business would suffer. Almost every company has some significant application that it relies upon to do business.
Who can provide source code escrow?
Escrow is a complex legal area and requires careful attention to national and international law, particularly intellectual property rights and so the escrow agent should be able to supply this, together with the necessary technical expertise to verify the deposits of code submitted for escrow. Similarly, the escrow agent should have an organised administration service, beyond the front-end legal services to establish the agreement, to allow for the proper administration of updates, notifications and so on.