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software escrow arrangement

Software Escrow

September 19, 2019

Sometimes developers go bust, or move elsewhere, or decide that software that your business uses is not worth continuing to invest resources in updating.

If you are reliant on such software it can be disruptive and costly. That is where software escrow comes into its own. It is an arrangement which protects you in such eventualities.

  • Under a software escrow arrangement, the software licensor and licensee agree that a copy of the software source code will be kept by a neutral third party ‘escrow agent’
  • The source code is the instructions underlying the software, and the code is usually kept confidential by the developer.
  • By getting access to the source code, and use of appropriate licence provisions, you would be free to instruct another developer to maintain your software and even to develop new software features for your business. They could even integrate the software with other programs your business uses.
  • You could also develop your own software updates internally in the event of the developer being unable to do so.

The more critical a piece of software is to your business, the more important it is to entrust an escrow agent to hold an up to date copy of the source code for you

Should I agree to a software escrow arrangement?

  • If you are a user of software then discuss your concerns with your developer.
  • We are well placed to help you to set up an affordable software escrow arrangement.
  • If you are a developer and are asked to enter into a software escrow arrangement it is important to take advice.
  • Source code will often be the most valuable asset you own, and by agreeing to a software escrow arrangement could mean you are forfeiting some of your control over it – this might reduce the value of your business so be sure to reach an agreement which safeguards your interests.