What is Software Escrow and its Overview

Posted by Sujitha Reddy

What is Software Escrow and its Procedure

A business without technology is something that cannot be expected in the current breed of time. As a business – whether a corporate or a startup – you need the software and purchase of the software programs is covered by several important procedures to ensure a continued use of software. Software Escrow Services ensure that your interests are protected and you would get an assured service of the software for a prolonged period of time.

What is Software Escrow?

When an establishment enters into a deal for the purchase of a software license, you would want to ensure that you would get the continued access to the service. You would also expect the service to provide you timely updates and maintenance.
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A software developer too would not want to part with the source code of the application. It forms a part of their prized possessions and also included in their intellectual property rights. This is exactly what brings up Software Escrow to the fore. The service takes care of the interests of the all the stakeholders involved in the deal.

Software Escrow involves depositing the source code of the software along with the data, documentations and other related files with a third party Software Escrow agent. The agent will be in the possession of the data until a situation described in the agreement arises.

Types of Software Escrow Agreements and Who should use them?

The Software Escrow Deal is governed by a Software Escrow Agreements. There are several types of Escrow agreements that depend upon the type of deal between the corresponding parties.

The major Software Escrow Agreements can be summed up as below

Single User Agreement

A single user agreement is also referred to as SB – Single Beneficiary Agreement. It would essentially be undertaken between the three parties viz the business, the software vendor and the Escrow agent. The owner of the software deposits the source code and other material to escrow agent and the firm stores it. It will be delivered to the licensee when a mutually agreed situation occurs.

This can be useful when there is a single licensee and a single software vendor.

Multiple Users – Separate Products Agreement

This type of agreement comes into force when there are multiple software products involved and it has multiple licensees for the software. This type of escrow agreement would be suitable when there is only one software vendor is involved, but licenses different software projects.

The deal has more than one beneficiary. However, not all of the beneficiaries have licensed all the software products. Needless to say, the software material consists of different software projects/products.

Multiple Users – Separate Escrows Agreement

This is yet another special case of Software Escrow agreement. The agreement would be useful when you have multiple beneficiaries with software products customized for each of them. Only a single software vendor is involved herein, but it will have more than one licensee – each of them with their own set of customized software.

The Concluding Thoughts

Well, agreements play an important role in any software escrow and that is precisely what makes understanding them in a better way. However, while choosing the Software Escrow Agent for your requirements, it would be wiser enough to take care of some points. Conduct your own research into the credentials of the escrow agents you have shortlisted.

A software escrow agreement is bound to take your business to greater heights.

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