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Guide to the terms we use when setting up software escrow agreements.

February 11, 2013

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, 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.

Licensee

An individual or organization who is licensed to use, or resell, the software developed or supplied by the software owner and who is, or will be, party to a source code escrow agreement. Acquirers, end users or resellers are usually the licensees.

Note

When software is supplied by a developer or similar agent, licensees normally receive only the object (compiled) code which cannot be amended. When no escrow facility is established, only the software owner will hold the source code.

Owner

An individual or organization that holds the intellectual property rights of the source code. This is usually, but is not restricted to, the individual or organisation, which develops or supplies the object code to the licensee.

Escrow Deposit

This is a general term, which refers to material placed into escrow. It shall comprise, as a minimum, a full machine-readable version of the software source code.

Escrow deposits should also include:

  • Details of the deposit, including:
  • Full name and version details
  • Media type
  • Backup/restore/archive commands, details of compression software etc.
  • Operating system details
  • Password/encryption details
  • Directory listings of the media contents should be supplied with the media, by the owner, to provide a first level check of what should be on the media.
  • Instructions for building, compiling, and installing the software
  • Names and versions of development tools
  • Software design specifications (for example, names and functions)
  • Contact details for staff who know how to maintain and support the material
  • User and maintenance documentation
  • Test specifications

Escrow agents should advise on the ideal contents of the deposit.

 

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written by David Clee

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