So what exactly can be deposited into Escrow? The answer to this question is directly related to what the Technology Vendor and Licensee agree to as “Deposit Materials”. In a Technology Escrow Agreement, “Deposit Materials” will be that portion of a Technology Vendor’s Intellectual Property that will not be provided to the Licensee; however, the Licensee wishes to safeguard.
The majority of Technology Escrow Agreements are established in order to resolve the ‘source code dilemma’. That is, most Escrow Agreements are established to provide the Licensee with access to the Technology Vendor’s source code and documentation, in the event that a specific, release/triggering event agreed upon by the Technology Vendor and Licensee occurs. So, in most Technology Escrow Agreements, the term “Deposit Materials” is associated with a Technology Vendor’s source code.
“Deposit Materials” can be defined in a Technology Escrow Agreement as:
“Deposit Materials” means proprietary technology and other materials identified. They are readable and useable in their current form or, if any portion is encrypted, the decryption tools and decryption keys must also be deposited and separately identified; and include a current version of any Source Code for all software licensed under the License Agreement and all updates thereto, together with all documentation necessary to enable a reasonably skilled programmer to maintain such licensed software, and descriptions of all compilers, assemblers and other computer programs and related documentation and other materials that are necessary or useful to use, modify and prepare derivative works of such Source Code.
Although the majority of Technology Escrow Agreements involve the deposit of source code(s), other deposits may include:
- Hardware Designs – Paper, electronic
- Development Plateaus
- Encryption keys
- Providing encrypted source to the Licensee & depositing the encryption key with an Escrow Agent
Although it is important to have both the Technology Vendor and Licensee agree to the contents that make up the “Deposit Materials”, it is equally important that both parties understand/appreciate what WILL NOT be deposited into escrow (e.g., third-party software).
Summary
Although the majority of Technology Escrow Agreements involve the deposit of a Technology Vendor’s source code(s), the fact of the matter is that Technology Escrow Agreements can be established for various types of Intellectual Property that a Technology Vendor does not want to provide to the Licensee; however, the Licensee wishes to safeguard.