Chester, United Kingdom (PressExposure) November 17, 2009 -- In many of today's software license agreements, companies purchasing software, Beneficiaries, are requesting that along with the program(s), a copy of the Software Developer's source code also be included.
Source code escrow is the deposit of the source code of software with a third party escrow agent. The software source code is released to the licensee if the licensor files for bankruptcy or otherwise fails to maintain and update the software as promised in the software license agreement.
Source code escrow is the humanly readable version of software written in a computer programming language intelligible to software engineers who are skilled in the art of the particular programming language. The software developer almost always withholds the source code from users and competitors alike, as access to it could enable the users to generate unlicensed copies of the program or allow a competitor to understand the trade secrets underlying the code. Therefore a copy of the object code, rather than the source code, is usually provided to the software customer by the vendor. However, the source code is essential for any on-going development or for the proper maintenance of the software application.
Establishing an escrow account satisfies the source code dilemma. It provides the Beneficiary with access to the source code and documentation should the Software Developer fail to maintain the license agreement, as well as provides them assurance against insolvency of the Software Developer.
Technology escrow is designed specifically to protect the growing number of organizations who outsource the development of specific elements of their operations to a specialist third-party; any type of business-critical information can be covered.
Often just as critical as software applications, business critical information currently protected by clients includes product designs, manufacturing processes, industrial formulae and branding material/advertising campaigns.
Escrow beneficiaries rely on technology vendors for technical support and maintenance. This dependency, especially if it involves software related to mission-critical business operations, exposes them to certain risks. If, for instance, a technology vendor went out of business or stopped supporting the license software for other reasons, the licensee would likely suffer considerable losses in revenue and productivity. A technology escrow agreement gives licensees the ability, under specific and controlled circumstances, to gain access to the source code needed to maintain the technology.