Software Escrow Agreement for Peace of Mind

2007-03-08 10:33:40

( Business )



A software escrow agreement is a contract that is most useful to programmers or software developers and corresponding software licensees. A software escrow agreement assures all the parties of the agreement that promises and intentions will be carried out in full and no possible misunderstandings can arise.

In the software escrow agreement, there are three parties involved. There is the programmer who owns the copyright to the program, the licensee who requests license to use the software and the software escrow agent or company that provides software escrow services to the aforementioned individuals or entities.

In the usual course of the licensee’s request for rights to a program, the developer will often be required to perform necessary maintenance and update the software. However, some developers neglect to provide this support. After installing the software, the programmer will sometimes refuse to make any more improvements or solve the licensee’s issues with the program.

A software escrow agreement makes the position of the licensee more tenable and enforceable. What the licensee does is request that the licensor escrow code or programming language. That is, the developer has to deposit a copy of the software code into the keeping of a software escrow company or any individual agent that offers software escrow services.

After the owner of the software code agrees, a source code escrow agent will be hired. If you are the owner of the program, it is better if you choose and appoint a technology escrow service that you trust so you will know for certain that your software will be in good hands and will not be abused for any purpose.

After the formalities of hiring the software escrow agent is finalized, a software escrow agreement is drawn up by the said agent. This agreement will bind all three parties (the owner, the licensee and the software escrow company) into a code of conduct enforceable by the law.

The software escrow agreement will expressly state the name of the software being put into escrow, the parties involved in the agreement, the conditions for termination, and other practicalities. Most importantly, though, the software escrow agreement specifies under what conditions the copy in deposit would be released to the licensee.

The usual software escrow agreement usually states that if the owner of the source code does not perform maintenance on the software, the code escrow agent can rightly give the copy of the code in escrow to the licensee. Other instances of release usually covered are bankruptcy, licensing agreement breach and change in software ownership. This means that the licensee will always gain the software’s code when the developer does not do what was promised.

The licensor is also protected when software escrow services are used. If you are the programmer, you can specify that even if the software can be released to the licensee according to the software escrow agreement, the licensee can only use the source code for maintenance and not for commercial use.


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