Software Escrow Basics
"A software escrow is a deposit of source code of software and other materials with a third party escrow agent. Generally, a party licensing the software (the "licensee" or "buyer") requests the software escrow from the owner of the software (the "software developer" or "developer") to ensure maintenance of the software and possibly performance of development obligations under a license....If...the software developer ceases operations or otherwise fails to provide support at a previously agreed upon level with the licensee, licensee will lose a vital part of its strategy regarding the licensed software and, absent a triggered source code escrow, may find itself unable to maintain and develop its products...
Basic Considerations...
Identify a software escrow agent...
Negotiate what goes into the software escrow...
Negotiate how often updates go into the software escrow...
Confirm what went into the software escrow...
Determine release conditions from the software escrow...
Determine who pays for the software escrow...
The licensee should also watch for and monitor the escrow account activity, which should include a description of what was deposited and when. In addition, consider a technical verification service... Most escrow agreements allow the software developer to oppose the licensee’s release request when a release event allegedly occurs... Ensuring that escrowed source code is complete and useful does not guarantee that the licensee will be able to work with it...Bankruptcy is often the most complicated issues in structuring and enforcing an escrow agreement..."
Read more in this Fenwick & West article from Mondaq.
