Deposix software escrow contracts

For our sample escrow contracts, please send an e-mail to info{at}deposix{.}com

 

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5th OSE Summertalk: September 27, 2019 in Berlin

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Topic: AI. Data. Escrow.

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New publication

"Cloud Escrow as Risk Management Tool" in Deposix' latest book contribution: 'Legal IT Handbook, 3rd edition, published in October 2013 (in German).

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Deposix is now a member of LES!

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Licensing Executives Society (LES International): 
"Advancing The Business of Intellectual Property Globally"

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[... upcoming LES-Events]

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FAQ - Frequently asked questions & their answers

What is software escrow?
What is technologie escrow?
What is source code?
What is an escrow agent?
How does a software escrow process work?
What issues are covered by a software escrow contract?
What are the concrete advantages of software escrow?
When is an escrow contract worthwhile?
How expensive is software escrow?
How do you check up on the reliability of a software escrow provider?
Which legal practitioners would find software escrow relevant?

Der Safe von Deposix

What is software escrow?

The deposit of (software) source code at a neutral third party (trustee). In case of software licensing a whole series of potential causes of friction may arise, based on experience, between software developers and their clients, the users. There is often a difference of opinion, at the latest when the source code is disclosed. This conflict of interests, so typical of the software sector, can be avoided through a so-called escrow agent, an independent trustee with technological skills, who impartially deposits the source code on behalf of both parties.

 

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What is technologie escrow?

Technology escrow is another term for software escrow. Both concepts can be used as synonyms. However software escrow is employed more frequently.

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What is source code?

The source code of software contains the developer's critical business secrets, which it would not generally wish to release to clients or third parties. However, users are dependent on the source code if they want to maintain the software operated by them without the help of the licensor, or to adapt it to their changing needs, and therefore frequently insist on the release of the source code. The escrow agent resolves this conflict of interests by depositing the source code. The agent only releases the source code to users following occurrence of conditions that have clearly been defined in advance.

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What is an escrow agent?

An escrow agent serves the interests of both the developer (protection of business secrets) and the user (protection of its IT investment) by holding the source code in trust. An escrow agent acts as a kind of catalyst, increasing the credibility and thereby the competitiveness of smaller companies in comparison with larger competitors. The user may access the source code in an emergency and may continue to use the software without restriction. At the same time, software escrow is the security network for the licensee.

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How does a software escrow process work?

When an escrow contract is concluded (usually between 3 parties), the deposited material is assembled by the licensor and handed over to Deposix. Deposix checks the material and confirms receipt to both parties. Deposix then actively supervises the contract, i.e. Deposix looks after matters such as updating the deposited source codes.

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What issues are covered by a software escrow contract?

A software escrow contract is an autonomous contract in which all legal relationships between the three parties - licensor, licensee and trustee - are regulated. Components of the contract include, for example, conditions under which the source code might be released, updating periods, liability issues and rights to the material.

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What are the concrete advantages of software escrow?

for licensees

Software escrow represents investment protection for IT projects for the licensee, by protecting against the failure of the licensor. Moreover, it allows for the maintenance, service and further development of software by its own employees or third parties. [...more]

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for licensors

The licensor secures a competitive advantage through the use of software escrow and thereby increases sales of its products. Furthermore, it protects its "intellectual property". [...more]

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for general contractors

The general contractor consolidates its own credibility on the market by reducing existing risks due to the potential loss of a supplier. It thereby protects contracts and obligations undertaken to clients. [...more]

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When is an escrow contract worthwhile?

An escrow contract is worthwhile primarily when licensing an especially security-relevant or business-critical software, or in case of licence contracts from around 50,000 euros.

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How expensive is software escrow?

In the simplest versions: € 1,200 acquisition fee (one-off) and € 1,200 (pro-rata) annual charge; this includes up to 4 updates/year and in each case our receiving verification/incoming inspection of material

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How do you check up on the reliability of a software escrow provider?

General reputation, reference clients, quality of contracts (!), age, number of business areas, management know-how, quality of consulting and (technical) appraisals on the source code ...

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Which legal practitioners would find software escrow relevant?

Attorneys specializing in ...

  • IT
  • technology
  • media
  • telecommunications
  • industrial property rights
  • competition law
  • patents and licences
  • Mergers & Acquisitions/transaction consulting and corporate finance
  • public procurement law
  • professional and managerial liability
  • insolvency law


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