Best Practices for Software Escrow in Licensing Agreements

Written by Danny de Wit | Published on May 18, 2020 | 0 Comments

Are you aware that you need to implement software escrow in your licensing agreements, but don’t know the best way to start? Then this is exactly the article you need to read right now.

Below you will find information on what a software escrow is, why you need them in your licensing agreements, and the best way to use them.

 

What is a software escrow?

 

Software escrow is a service to help protect all of the parties involved in a software license. The service is offered by a third-party that acts as a neutral agent to hold the source code, data, and documentation. The licensing agreement typically defines a mutually-agreed-upon event that triggers the release of information from the software escrow to a legally entitled party.
You can learn more about how a software escrow works by visiting the Codekeeper website.



Why you need a software escrow

 

Source code escrow services benefit both the software vendor and the licensee. Here are the main benefits for each party:

 

Benefits for the software vendor:

 

- Negotiations with your licensees go smoother because you have the legal and technical guidance of your escrow provider.
- You establish confidence with your licensees by addressing their concerns upfront.
- You secure the safe storage of source code and software materials all in one place with a trusted third-party rather than across multiple places for various beneficiaries and licensees.

 

Benefits for the licensee:

 

- You receive the ability and documented legal right to maintain and update essential parts of the software product.
- You reduce the chance of interruption or damage to your business.
- You can mitigate your own concerns regarding the software vendor’s capabilities.
- You ensure business continuity.

Essentially, the escrow provides peace of mind in case the licensee worries that the software vendor is not financially stable, could go out of business, or might discontinue or breach their maintenance and support obligations for the software. And having that confidence is good for the vendor as well.

 

Best practices for source code escrow

 

So if you have software, source code, and/or documentation that you need to protect your business, it pays to know the right steps to take in establishing a software escrow. Here’s what we suggest:

 

Practice-source

 

Look for a reputable software escrow agent to execute the escrow agreement

 

You’ll want to select an escrow service that is transparent and shows you exactly why they are trustworthy and dependable. You should be able to find out where they keep your materials, what their legal expertise is, and what their technical expertise is.

You should also check if it will be easy for you to manage the escrow. You can get all of these capabilities with Codekeeper.

 

Ensure that all of the source code and other materials are entrusted to the escrow agent

 

When you select software escrow service, they should make it easy for you to deliver everything that is needed in the escrow. That includes source code, documentation, and other important materials related to the code. You’ll know that you’re working with a reputable escrow provider if you’re able to integrate your existing software tools with the escrow service and can automatically synchronise information.

This includes making sure that the escrow is updated as the software product evolves. You want to make sure that all the new versions are protected by the escrow. Your escrow service provider should be able to automate this process so that it’s always up-to-date.

For instance, Codekeeper integrates directly with Github and other SCM platforms. Source code deposits into the escrow are encrypted and fully automated.

 

Make sure the source code is held securely until release conditions occur

 

Your licensing agreement should define what the release conditions are for any data stored in the software escrow. To ensure that everyone complies with the agreement, it should only be released to the licensee if those specific conditions are met.

Codekeeper helps you set up the release terms for your agreement by requiring that each beneficiary is specified with the source code repositories that they should receive and the conditions that should be met for release.

Click here to learn more about what Codekeeper can do for your licensing agreements.

   
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