What is Software Escrow?

What is Software Escrow?

A Software Escrow Arrangement is an agreement that protects both parties in a License Agreement. Its purpose is to provide a Licensee with access to a Technology Vendor’s intellectual property (i.e., source code and documentation), in the event that a specific release event agreed upon by the Parties occurs.

This works by having a Technology Vendor deposit their intellectual property with an agent of an escrow account, who will then in turn, store the intellectual property in a secure location. If a release event occurs, the agent will then release the intellectual property to the Licensee. The account is similar to that of taking out an insurance policy in order to safeguard the rights of both parties. 

A Software Escrow Arrangement protects a Technology Vendor’s interests, while permitting a Licensee to maintain and enhance their investment in the event that a Technology Vendor is unable to continue its operations.