Who’s who in a software escrow agreement?
We use the following terms interchangeably throughout this article:
The licensor is typically a software developer or vendor who deposits source code and other materials into escrow. They're also referred to as the depositor. The client, or the authorized end-user, is typically referred to as the beneficiary or licensee. A neutral third party, such as Codekeeper, typically serves as the escrow agent, providing secure storage of the source code and other materials, and making available (releasing) the contents of an escrow account to its beneficiary (or, beneficiaries) — upon a release condition being met.
Depositor or Licensor
Typically, the depositor/licensor tends to be a smaller software development team in comparison to their beneficiary counterpart. Once one of their clients begins to rely more heavily on their software for operations, concerns usually arise over the continuity and security of that system.
During renegotiation of their licensing agreement, the client might request that the system in question be deposited into escrow. Should any adverse, unforeseen event take place, the client will be able to retrieve the valuable code and IP, and resume operations as usual.
These smaller development teams can also use software escrow as a selling point for their services, reassuring potential clients that if anything happens to the firm, the IP is secure in storage, up to date, and ready to be released once a trigger event takes place.