The source code of a software program is the detailed specification or "blueprint" of its creation, operation and functionality and without which a software programmer cannot readily understand the software for the purposes of modification, enhancement, "debugging", support or indeed, replication. The source code is not required for the normal commercial use of the program by an end-user.
The source code is therefore highly confidential and the owner of the copyright of the software will not wish to disclose the same to any end-user or distributor even though such parties will have entered into an agreement or licence with the software owner for use of the software.
However, if the software program is essential to an end-user or distributor's business, such end-user or distributor may require the software owner to arrange for the source code to be made available to them in the event that the software owner dies, goes out of business or is in material breach of its obligations to support and maintain the software to a proper operational standard.
Such an arrangement is now commonly made with an independent third party, an Escrow Agent, mutually agreeable to both parties who is contracted by the parties to hold the source code until such time as the parties' agreement or licence has expired or terminated or until the occurrence of certain specific events, usually the death, liquidation or material breach of the Software Owner, whereupon the Escrow Agent is authorized, upon certain conditions, to release the source code to the end-user or distributor, as the case may be.
The purpose therefore of an Escrow Agreement is to provide for the terms of deposit of the source code and conditions of its release to the end-user or return to the Software Owner.
The Escrow Agreement should provide for the Software Owner to keep up to date the code held by the Escrow Agent from time to time as and when changes are made and the software is debugged and enhanced.
A more complex form of agreement may also provide for the code held by the Escrow Agent to be periodically verified - this will of course be significantly more expensive to administer on an ongoing basis.
First, decide whether on Escrow Agreement is in fact necessary.
Then, decide whether periodic verification will be required.
Decide whether the obligation to deposit is to relate to just the source code, or also to software listings, object code and all drawings and specifications which together describe every aspect of the software and step in its creation.
Decide also whether the items to be deposited are to be continually updated.
Decide who the Escrow Agent is to be and where/how the deposited code etc is actually to be kept.
Then, let me know and I'll happily draft the Agreement!
Info from some Escrow agents
I'd really appreciate your feedback on this FAQ - so mail me and tell me what you think of it, if it's been useful to you, or let me know of any specific problem you have where I may be able to help.
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This page was last updated 20 January, 1996.
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© Roger Sinclair roger@egos.co.uk 1996 - All rights reserved - see full copyright details
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