What should you know about software escrow agreements?

Software escrow agreements have become essential to both developers and users of software and source code, and will probably become even more necessary with the use of outsourcing. Setting up an escrow agreement for intellectual property just makes plain sense these days where uncertainty due to frauds and scams abound.

First of all you should be congratulated for looking into software escrow agreements. Not every one does so ahead of time, and this can lead to many heated discussions about who actually owns the intellectual property of the software, or in other words who actually should possess or have access to the source code for software. This isn’t always straight forward, as the software developers are often paid to develop this buy the company wanting to use this.

software escrow agreements - business handshake

By using a third party escrow agent to help establish software escrow agreements ahead of time, this headache can be removed. There will be necessary conditions that both parties need to agree on ahead of time, and the escrow agent will help you with this.. There are various source code agreements for software, depending on whether the software is highly customized, in which case a single user plan is suggested, or whether it is to be packaged software available to many, when the multi user plan would be needed.

So, what do you need to do for a software escrow agreement? You need to use a third party neutral escrow agency, or agent who will take control of the source code for the software. This agent will sign any agreement, along with the developer of the software, and in the case of a single user, the licensee or user of the software. In the agreement will be some trigger points. These are events that, should they occur, may indicate to the escrow agent that the source code needs to be released to the licensee. The trigger points are set up in advance, with the agreement of all involved, so that there are no nasty surprises for any one. Naturally these events need to be carefully agreed on, and considered before including them in any escrow agreement.

Find a reputable software escrow service provider, in fact, start by interviewing a few of the ones that seem the best to you. Do a Better Business Bureau check on these to see if there are any negative comments about them – the internet is good for that! Check into the different agreements that the companies offer. Do you need a single user plan, suggested for those software developers who produce software that is highly customized, ie for a single user. Look into the multi user plan which are typically used for packaged software. If you are looking to invest, then you need to check the investor security plans available with each escrow agency. Make sure you know in advance what the fees are going to be, and what will increase them in the future. This is usually when the escrow agent has a lot more work to do, for whatever reason.

Knowing the answers to the above scenarios will help you to choose the best software escrow agreements from the best escrow agents for you and your company, and then you can relax, knowing your software and source code is being handled by a suitable third party escrow agent.