Initiating a Software Escrow Agreement is only the beginning when it comes to protecting your intellectual property. Nourishing the escrow clause in your source code escrow agreement is an important next step that helps keep escrow arrangements refreshed and effective.

What is a Source Code Escrow Clause?

A typical software license agreement may have a “source code escrow clause” within it stipulating that the Technology Vendor and Licensee will establish an escrow agreement within thirty (30) days of the effective date of the license agreement.

In a simple scenario, this is easily accomplished with the help of a software escrow agent.

The two parties establish their escrow agreement within thirty (30) days and the agreed-upon intellectual property, such as source code and related documentation, is submitted into escrow.

How do I maintain my Escrow Deposit?

In some instances, this is where the story ends. The Technology/Software Vendor and Licensee reinforce their relationship over the years through implementing various releases, improvements, revisions, and enhancements generally made available by the Technology Vendor.

The problem lies in the fact that although various actions are implemented in the Licensee’s production environment, the deposit materials remain “stale and undernourished”.

A Technology Escrow Arrangement should be considered a “living, breathing instrument” that is fed frequently. Remember that the purpose of having a “source code escrow clause” is so that the Licensee can maintain and enhance the software in the event that an unanticipated and/or catastrophic occurrence does not permit the Technology Vendor to continue its operations.

In order to maintain an effective escrow arrangement, escrow deposits with an escrow clause should be refreshed frequently so that the materials in escrow correspond with the Programs actually distributed to the Licensee. In the event of a release of the deposit materials, having an updated escrow clause can help both parties from a massive headache.