In many of today’s license agreements, companies licensing software, Licensees, are requesting that along with the program(s), a copy of the Software Vendor’s proprietary source code also be included with their license. Source code contains the instructions that create the software program, which can be transformed into an executable program, in order for the software to run as it should.

Although business models of many Software Vendors do not support providing a copy of their source code to their clients for financial reasons such as loss of maintenance revenue, etc., as well as fears involving piracy, etc., it is important to understand why Licensees desire to have source code as part of their license.

Source codes are generally requested by Licensees simply for their own protection. With access to the source code, they can maintain and enhance the software in the event that a catastrophic occurrence does not permit the Software Vendor to continue its operations.

Rather than having a request for source code be a reason to part ways with a prospective customer, a Software Vendor should embrace a Licensee’s request as evidence that their software/solution is deemed valuable.

Many Software Vendors recognize this fact and are compromising with their clients by establishing a software/source code escrow accounts. Establishing an escrow account satisfies the “source code dilemma”.  It provides the Licensee with access to the source code in the event that a catastrophic occurrence does not permit the Vendor to continue its operations; while simultaneously, protecting the Vendor’s interests and increasing the value of their solution to their prospective clients.

Placing your organization’s source code/intellectual property in escrow with a trusted, neutral, third-party provider of Software Escrow Services demonstrates that you have your customers’ long-term interests in mind.

Establishing an escrow account for source code demonstrates concessions by both parties. The Licensee concedes that the source code is the blood line of a Vendor’s business model which cannot be disrupted; while the Vendor concedes that its customer must have access to the intellectual property in the event that they are unable to satisfy the obligations set forth in the License Agreement.