Why is Source Code Escrow important?

 

Source code escrow is an important safety feature for both the software developer and the client who is licensed to use the software product by the developer. Unfortunately, life has become more complicated in many ways due to the advance of internet technology.

Software can do some remarkable things thanks to the advance of programs and source code, and there are often disputes when a company hires source code developers as to who actually owns the source code. This is because the developers actually put together the program and make sure that it runs as it should, but much of the time to do this has been billed to the company authorizing its building.

This then is where source code escrow becomes essential. Both parties need to set out what their expectations are from any deal, ahead of time. This document along with the source code once it has been developed, along with any other items of value agreed upon by both companies,  are held by a neutral third party called an escrow agent.

This agent will make certain that the escrow agreement is followed, and should either party break this agreement, then the other party receives what is stated in the agreement. For example, if company A produces some software that company B has agreed to pay for, and it has been agreed that the source code will be held by a software escrow agent, if company A then fails to maintain the software as the agreement states, then company B is entitled to the source code, if this is what the contract states.

By putting the source code in escrow, there is some reassurance that neither company will be left out in the cold should the contract not work out as planned. This makes software source code escrow a very important issue to be set up ahead of time.

Now, if the software developer licenses other companies to use their software, then these licensees may also wish to have a source code escrow agreement set up, so that if the developer fails to carry out the contract then they have access to the source code so that they can still go on using what they have been licensed to use.

Naturally enough, these software escrow agreements can get pretty complex, but they are good to use, because they force both parties involved to document their expectations ahead of time, with fall back plans that are acceptable to both. Escrow agencies are being used more and more to try to reduce fraud, and limit the damage done should a company fail to produce what is expected, and because of this software source code escrow agents are filling a definite need in the world.

Incoming search terms for the article:

• code escrow
• source code escrow
• escrow clause
• software escrow clause
• escrow source code
• escrow code
• source code escrow clause
• why source code is important
• source code escrow arrangements
• source code contract

Tagged as: code escrow, dsi source code escrow, impact escrow software, national software escrow, ncc source code escrow, software escrow, software escrow account, software escrow agreement, software escrow solutions, software escrow wiki, source code escrow, source code escrow agent, source code escrow agreement, source code escrow bankruptcy, source code escrow clause, source code escrow cost, source code escrow intellectual property, source code escrow iron mountain, source code escrow pricing, source code escrow provision, source code escrow service, source code escrow services, source code escrow voting, source code example