What is Software Escrow?

Protect Your Critical Software

What happens if your software vendor enters bankruptcy? How will your company be assured of continuity for the software you depend on? Learn how a robust software escrow agreement can help.

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What is Software Escrow?

Software Escrow also known as Source Code Escrow is a three party agreement between a software developer (the depositor), the end user (beneficiary) and the software escrow vendor (The Escrow Company). The objective of a software escrow agreement is to provide comfort to the end user that if the software developer is unable or unwilling to support the critical software, the code, data and other critical digital assets can be released to them.

SaaS Escrow is similar to a software escrow agreement but provides continuity for cloud hosted software usually hosted within Microsoft Azure, AWS or Google Cloud. The SaaS Escrow solution usually includes:

Replica cloud environment providing swift continuity in a release event;
SaaS Environment Escrow includes automated deposits of all the components required to deploy the software to a cloud environment including source code, deployment scripts and databases;
Access Continuity to the cloud hosted production environment and account through the deposit of access credentials.

The software escrow agreement outlines the responsibilities of all the parties and includes pre-defined release conditions which may be amended during the negotiation phase.

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Examples of typical software escrow release conditions?

The release event conditions usually included within a software escrow agreement (these may be amended):

Bankruptcy;
Insolvency;
Discontinuing support or service of the critical software application;
Failure to support the product that is licensed to the Beneficiary and then failing to cure such a material breach within ten days of notice;
The sale of intellectual property rights to a third party who does not continue providing the same level of protection provided for the beneficiary in the escrow agreement.

Following a release event, the beneficiary may request for the escrow company to release the deposit materials including the source code. The depositor has the opportunity to dispute such a release event and if necessary, the decision may be moved to arbitration.

What Type of Agreement Do You Need ?

The Escrow Company offers a range of free template agreements which provide a great starting position to commence the negotiation of a fair software escrow contract.

The Software Escrow Deposit?

Depositing the source materials and data is a critical component of the software escrow agreement. The Escrow Company is a leading global supplier of software escrow services, and we understand that the process needs to be simple, efficient and secure.