A typical License Agreement may have a “source code escrow clause in it documenting that both the Technology Vendor and Licensee (“Beneficiary”) will establish a Software Escrow Agreement with a trusted, neutral third-party provider of Technology Escrow Services.

Depending on the License Agreement, this clause may be very generic in nature or quite specific (i.e., documenting the specific triggering/release events that the parties have agreed to, as well as the obligations of both parties concerning the Escrow Arrangement.)

As mentioned in a previous blog entry, most trusted, neutral third-party providers of Technology Escrow Services will offer a template Software Escrow Agreement, thus saving you time and money associated with hiring an attorney to draft one for you.  Within the template Agreement, terms and conditions will be documented defining the Escrow Agent’s duties, the triggering/release events, as well as the obligations of the parties concerning an Escrow Arrangement.

It is important that both the Technology Vendor and Licensee review the terms and conditions of the Escrow Agreement, making certain that the Agreement protects the rights, interests and investments of both parties.  It is equally imperative that any specific language in the “source code escrow clause” in the License Agreement also be incorporated into the Escrow Agreement.

A sample Escrow Agreement states:

“This Agreement controls the parties’ respective obligations concerning only the subject matter hereof.  To the extent of a conflict between the License Agreement and this Agreement concerning the Escrow Agent’s duties, this Agreement controls.  And, to the extent this Agreement modifies the Technology Vendor’s and the Beneficiary’s respective obligations under the License Agreement concerning an escrow arrangement of the Deposit Materials and related documentation, then this Agreement also controls.”

Summary

Having a “source code escrow clause” in a License Agreement should trigger the establishment of a Technology Escrow Agreement.  To avoid conflicts, make certain that any specific language documented in this clause also be incorporated into your Escrow Agreement.

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