The Answers will show Why Source Code Escrow is What You Were Looking For

In this blog, we will be discussing the what, why, what, and why of source code escrow.

  • What does source code escrow protect?
  • Why is it essential to protect source code?
  • What can happen to your software if it is not in escrow?
  • Why is it vital to have access to source code?

Source Code Escrow

But first, let us understand what source code escrow is, also referred to as technology escrow. Source code escrow arrangements, sometimes called software escrow agreements, are becoming more critical in our world’s complicated and ever-evolving technological landscape. Businesses face risks and hazards associated with commercial software applications, SaaS applications, software source code, object code, executable code, and information technology in general. These concerns can be mitigated by hiring a software escrow agent for their escrow services, establishing a source code escrow agreement, and putting the deposit materials or escrow materials into escrow deposit for protection.

What does source code escrow protect?

A Source code escrow agreement is an arrangement that protects both parties, the licensor, and the licensee. Its purpose is to provide a licensee with access to a software vendor’s source code when agreed-upon events occur. This specific event is called the release event or release conditions. Companies generally request source codes for their protection of intellectual property. Source code contains the instructions that create the software program itself, which can be transformed into an executable program via the object code for the software to run as it should.

This works by having a Software Vendor deposit their source code with an agent of an escrow account, who will then store it in a secure location, either offline or in-house in a secured cloud environment. Then, if a release event occurs, the agent will release the licensee’s source code.

Why is it essential to protect source code?

Software Escrow protects a licensee by giving access to the software vendor’s source code if an unanticipated or catastrophic occurrence happens. For example, suppose the software company or software provider ceases operations, becomes insolvent, or no longer supports the software, or holds to its maintenance obligations and updates. In that case, the licensee can be at significant risk. A simple software license agreement will not suffice in this situation. This is true for SaaS as well. Providers of Software as a service can also face similar business continuity risks and place the licensee in precarious situations.

Escrow agreements compel parties to submit to alternative dispute resolution procedures, such as arbitration or mediation, in the case of a disagreement over the source code’s release.

What can happen to your software if it is not in escrow?

If software source code is not in escrow and the calamities mentioned earlier strike, you could face a mountain of operational and legal challenges. The ability to operate and perform for your customers and shareholders is at stake. Therefore, you need assurance that the critical applications and software you utilize will not be compromised or disrupted.

Why is it Vital to Have Access to Software Code?

Having access to source code is vital for both disruption and functionality issues. The deposited source code may be custom software or a new algorithm for fraud detection, or it could be any other business-critical digital piece within your enterprise. Having access to software source code through your escrow agent allows you peace of mind. The escrow agent will release the deposited material to the beneficiary if specific pre-defined requirements are satisfied, called the release conditions. With the licensor’s direct transfer of the intellectual property or release of the source code, the licensee receives the protection it needs.

Do You Need Source Code Escrow working for you?

Software escrow may be a wise decision if, after considering the reasons mentioned above, the parties conclude that the advantages of having the escrow materials securely kept with a third-party escrow agent are more significant than the costs.

Recognizing the above risks will help you gauge if establishing a software escrow agreement with your software vendor or service provider will protect your organization’s interests.

National Software Escrow, Inc.

National Software Escrow, Inc. (NSE)is an independent service provider of software source code protection services for software companies and their end-users. The professionals at NSE have been servicing clients since1986. With more than 35 years of experience, NSE is your trusted partner for software source code protection.

We have retained the services of one of the country’s leading law firms whose specialists in computer-related contracts understand the technical objectives of these transactions. Rest assured, our Agreements are carefully researched documents designed to protect your rights, interests, and investments.