2023 started with a series of high-profile data breaches that exposed sensitive information of millions of users, compromising their privacy and security. Data breaches is nothing new, but the concerning reality is that these incidents are increasing year-on-year with an ever increasing impact on data security, financial loss, and the privacy of millions of individuals around the world. Here are the top 3 notable data breaches of 2023 so far:

Source code verification is an essential aspect of software escrow that contributes to the overall security, stability, and legal compliance of software applications. By adhering to best practices and understanding the importance of this process, both software vendors and licensees can benefit from enhanced risk mitigation and build long-lasting business relationships founded on trust and transparency.

As software continues to play an increasingly vital role in various industries, businesses are becoming more aware of the risks associated with their software applications. One of the most significant risks is the possibility of the software vendor going out of business, leaving their customers without access to the software that they have come to rely on. To mitigate these risks, software escrow has emerged as a valuable solution.

 

Software escrow is a legal arrangement in which a neutral third-party escrow agent like Codekeeper holds the source code, documentation, and other materials related to a software application on behalf of the software vendor and their customers. We are responsible for ensuring that the materials are maintained and updated regularly, and that they can be released to the customer under specific conditions, such as the software vendor's bankruptcy or the vendor's failure to maintain and support the software.

 

There are three main types of software escrow: software escrow, source code escrow, and SaaS escrow. Each type of escrow serves a different purpose and offers different benefits to software vendors and their customers.

 

Software Escrow
Software escrow is a type of escrow in which Codekeeper holds a copy of the software application, along with the documentation and other materials needed to install and run the software. This type of escrow is most commonly used for off-the-shelf software applications that are purchased by businesses and other organizations.

When a business or organization purchases software, they typically rely on the vendor to provide ongoing support and maintenance for the software. However, if the vendor goes out of business or is unable to provide support, the business may be left without access to the software they have purchased. With software escrow, the business can ensure that they have access to the software they need, even if the vendor is no longer able to provide it.

 

Millions of users of Mailchimp, a renowned email marketing platform, were affected by a data breach on January 18th, 2023. Sensitive information, including names, email addresses, and other personal data, was compromised. Mailchimp, however, has pledged to secure the platform and prevent similar attacks. Nevertheless, this event raises concerns about the security of Software as a Service (SaaS) products and the advantages of SaaS escrow.

Millions of users of Mailchimp, a renowned email marketing platform, were affected by a data breach on January 18th, 2023. Sensitive information, including names, email addresses, and other personal data, was compromised. Mailchimp, however, has pledged to secure the platform and prevent similar attacks. Nevertheless, this event raises concerns about the security of Software as a Service (SaaS) products and the advantages of SaaS escrow.

 

SaaS escrow is a service that safeguards both SaaS providers and their customers by granting access to the source code, data, and other crucial assets if a catastrophic failure occurs. Such failures may include a security breach, financial instability, or bankruptcy. The service acts as an intermediary between the provider and its customers, storing the provider's code and data in a secure place and releasing it to customers only in specific circumstances.

 

In the case of Mailchimp, SaaS escrow could have been an invaluable tool for both the provider and its customers. It, for example, could have provided a safety net for Mailchimp in the event of this security breach following a previous breach that took place in 2022. Mailchimp's customers could have been assured that their data and other critical assets would remain secure even if the provider experienced a breach or other failure.

 

In today's technology-driven world, businesses depend on software applications for their daily operations, and the reliability of these applications is critical. To mitigate risks associated with software unavailability or the inability of the software provider to support the application, companies can turn to software escrow agreements. This article will delve into the key components of a software escrow agreement, highlighting the aspects that ensure a successful and secure arrangement.

 

What is a Software Escrow Agreement?

A software escrow agreement is a legally binding contract involving three parties: the software developer (licensor), the end user (licensee), and a neutral third-party escrow agent (Codekeeper). This agreement outlines the conditions under which the escrow agent releases the source code and other vital materials to the licensee, usually when the licensor is unable or unwilling to fulfill their obligations, such as providing maintenance, support, or updates.

 

Key Components of a Software Escrow Agreement

• Definition of Release Conditions

Release conditions are a crucial element of a software escrow agreement, as they outline the specific circumstances under which the escrow agent can release the source code and other materials to the licensee. Common release conditions include:

1. The licensor's bankruptcy or insolvency
2. The licensor's cessation of business operations
3. The licensor's failure to provide adequate support, maintenance, or updates

It is essential to clearly define these conditions in the agreement to avoid ambiguity and ensure a smooth release process when necessary.

 

Deposit Materials

The agreement should explicitly specify the materials to be deposited into the escrow account. These materials include:

1. The source code
2. Documentation
3. Build instructions
4. Test data and scripts
5. Application programming interfaces (APIs)
6. Any other components required for the licensee to maintain and support the software

It is crucial that the licensor regularly updates these materials to guarantee their relevance and usefulness in case of a release.

 

Verification and Testing

To ensure the accuracy, completeness, and functionality of the deposited materials, Codekeeper offers different verification service options to suit your specific needs. You can have a look at our different verification options here. The verification process typically involves:

1. Reviewing the materials for completeness
2. Confirming the materials' compatibility with the licensee's systems
3. Assessing the materials' functionality according to the specifications

Verification and testing should be conducted periodically, as well as upon the licensee's request or when significant changes are made to the software.

 

Escrow Agent Selection

Choosing a reputable and experienced escrow agent is critical to the success of the software escrow agreement. The agent's primary responsibilities include:

1. Safeguarding and storing the deposited materials
2. Verifying and testing the materials, if required
3. Releasing the materials to the licensee as per the agreement's conditions
4. Ensuring compliance with the agreement's terms by all parties

It is essential to select an escrow agent with a strong track record in managing software escrow accounts and a comprehensive understanding of the legal and technical aspects involved. Codekeeper has been providing expert software escrow services to thousands of well-known brands and companies around the world for the last decade. Our track record speaks for itself.