Software Escrow: Third-Party Keeper

2007-03-08 10:33:40

( Business )



PROTECTING BOTH PARTY’S RIGHTS

For programmers and software developers, it is a dream come true to be able to design a program that finds acceptance in the market. However in an era of open source, it can difficult for software developers to protect their intellectual property rights.

Software escrow is a legal and business solution that ensures that the software developer’s rights are protected alongside the rights of end-users to get full program functionality and support. Under software escrow services, the hard copy of an application’s source code or programming code is kept by a third-party escrow for safekeeping. The escrow is then governed by terms that are stipulated in the software escrow agreement.

Usually a software escrow is required when the program involved is designed to perform sensitive and critical business applications. The software escrow agreement obliges both parties to perform certain duties to ensure the protection of both their interests.

OWNERSHIP BY DEFAULT

A software escrow is regulated by terms and conditions that both programmer and user has agreed to uphold. A software escrow agreement defines how the source code is stored and how software updates are handled. Software escrow agreement also defines the parameters within which the program can be used and maintained by the user.

The most important information in a software escrow is the list of possible events that will prompt the release of the software’s source code. Once the source code is released from software escrow, the receiving party then gains control of the source code and the actual application as well.

If you are a corporate end-user, what do you stand to gain from a software escrow? You get the guarantee that the program you have purchased will perform as promised to you by the developer. If the program falls short and fails to deliver its mission-critical functions, then you obtain the right to seize the program’s source code and gain ownership of the program as well.


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