Software escrow is one way of protecting you in certain types of projects when certain things go wrong.
When you contract out for software to be written for you, there are several decisions that are part of the process. One that's often overlooked is whether or not you get a copy of the source code when the project is done.
The source code is the collection of written instructions that the programmer actually writes to create a program. For many types of programs, the source code is then transformed into the "executable" that you actually run. For example "notepad.exe" is a executable program that comes with Windows. Somewhere back at Microsoft they keep the written instructions, or source code, that the programmers used to create it.
Open source software projects make the source code publicly accessible. Anyone with enough knowledge can create the software executable using the source code. Closed source, or "proprietary" software is just the opposite ... the source code is not available publicly, only the executable. Companies use this approach to retain their intellectual property, and trade secrets.
When you contract with someone to write software for you one decision, implied or explicit, is whether the source code belongs exclusively to the developer, or whether you get a copy. If you do, you have the safety of being able to have someone else make changes or fix bugs in the future, but the developer is giving up some of his or her potential control of that software. If the developer retains the source code and you don't have access to it, then you are dependant on the developer for all future updates. Typically developers will charge more if you get the source code.
It's common to opt for the cheaper option, or to have the developer simply not give you the option.
So what happens if your developer goes out of business? What if all of the source code simply disappears?
That's where software or source code escrow comes into play.
As part of arranging for your software to be written, you and the developer can agree that a copy of the source code will be given to a neutral third party - an escrow agent. The agreement would then specify under which conditions that agent would be allowed to release the source code to you. For example one of the conditions might be the developer's bankruptcy or going out of business for other reasons. By using software escrow, the developer is protected as long as it makes sense for them to retain control, and you are protected should the developer disappear. (Naturally other conditions might trigger the release, but the developer's going out of business is a clear example.)
Software escrow is not fool proof. For example, what happens if the escrow agent goes away? And escrow typically adds some cost to your transaction.
Escrow of software source code and associated materials may provide essential protection to software developers’ customers. It involves the developer providing an independent third party with copies of source code and other relevant materials. In the event of certain triggering conditions, such as the developer ceasing to trade, the source code and materials will be released to the customer who may then work with the source code as and when required.
Software developers can add value to their services by offering escrow to their customers. Their customers will have the security of knowing that they can continue to use and improve their software even if their software developer ceases to trade.
Customers can protect their investment in their software, particularly for custom built software solutions by ensuring they have continued access to the source code, allowing them to continue to use and develop their software even if their software developer ceases to trade.
We can also provide a documented history of your source code lodgment, which may be useful to demonstrate your development history in the case where a third party claims you have infringed their copyright or other intellectual rights.
In some cases, you may be eligible for a discount on your insurance policy where you store your source code in escrow - it is worth checking this with your insurance company.
Wednesday, April 4, 2007
ASP Escrow & Banking Data Escrow
ASP Escrow
ASP is in strong demand. More and more companies make use of application service providers . Inherent to this development, the reliance on the supplier increases. With a specific escrow arrangement, the risks can be considerably reduced.
With ASP, applications such as CRM or payroll software are used from a distance. This has a number of important advantages on issues such as user friendliness, maintenance and installation. Another consequence is that important data - such as customer data or salary administration - are stored on the servers of the ASP supplier. If the application fail and the data is no longer accessible, it will have extensive economical and organisational consequences for the user.
Every ASP Escrow is a custom-made escrow arrangement combining Software Escrow, Data Escrow and full documentation of ICT-infrastructure and alternative configurations
Data Escrow
Data Escrow originates from backup processes. A backup is used in case the regular data is no longer available. For example in case of fire. Backups are often made with in-house systems, on in-house tapes and stored in in-house vaults. In practice, it appears that in 80% of the cases a backup does not reproduce the desired result. The data is either unreadable or inaccessible.
With the advent of ASP's, Outsourcing and Hosting centres, Data Escrow becomes very relevant. In these situations, user data are stored on third party systems, with third party licenses, within the physical walls of the third party and managed by staff of the third party
Therefore, the owner of the data should protect himself if case suppliers no longer manage to meet their obligations. A Data Escrow can provide the assurance needed. It is also possible to tackle the problem of illegible or unusable backups. Our technical verifications of the data provide security. If data is critical to your business, a Data Escrow is a must.
ASP is in strong demand. More and more companies make use of application service providers . Inherent to this development, the reliance on the supplier increases. With a specific escrow arrangement, the risks can be considerably reduced.
With ASP, applications such as CRM or payroll software are used from a distance. This has a number of important advantages on issues such as user friendliness, maintenance and installation. Another consequence is that important data - such as customer data or salary administration - are stored on the servers of the ASP supplier. If the application fail and the data is no longer accessible, it will have extensive economical and organisational consequences for the user.
Every ASP Escrow is a custom-made escrow arrangement combining Software Escrow, Data Escrow and full documentation of ICT-infrastructure and alternative configurations
Data Escrow
Data Escrow originates from backup processes. A backup is used in case the regular data is no longer available. For example in case of fire. Backups are often made with in-house systems, on in-house tapes and stored in in-house vaults. In practice, it appears that in 80% of the cases a backup does not reproduce the desired result. The data is either unreadable or inaccessible.
With the advent of ASP's, Outsourcing and Hosting centres, Data Escrow becomes very relevant. In these situations, user data are stored on third party systems, with third party licenses, within the physical walls of the third party and managed by staff of the third party
Therefore, the owner of the data should protect himself if case suppliers no longer manage to meet their obligations. A Data Escrow can provide the assurance needed. It is also possible to tackle the problem of illegible or unusable backups. Our technical verifications of the data provide security. If data is critical to your business, a Data Escrow is a must.
Industrial Escrow
By the use of partially products, outsourcing, and use of special machinery a production processes can be very complex. In today's technology driven society companies are increasingly dependent of third party knowledge. Dependence implies risks.
If the risks are directly related to the core business processes it is crucial to minimize the company's exposure and that can be done through Escrow.
Is your core business process dependent of software, an industrial formula or other vital know how you do not have?
If so, Escrow Europe Industrial provides custom tailored solutions to have that vital information safe deposited in a way that does not harm the interests of the owner/supplier of the know how.
What's more, Escrow Europe Industrial offers its longstanding experience with specialized technical services to verify the accuracy and completeness of the deposited materials, more in specific in the area of source code escrow. Finally, Escrow Europe Industrial keeps the material up-to-date during the life cycle of the product if any changes are made to the materials.
Vice versa, if you are the owner or supplier of vital know how and your client rightfully requires that know how to be safeguarded and available for as long as he needs it, you can meet that requirement without exposing the confidential nature of the material and without limiting any of your proprietary rights.
Deposit of material with Escrow Europe implies the transfer by Supplier or Industrial designer of ownership of a medium containing the specifications, building schemes, technical documentation and/or source code of an Industrial Design, System Software, Product or Production Process.
Escrow Europe Industrial verifies the Material, holds it in deposit and under normal circumstances is not allowed to do anything with it. However, given certain circumstances occurring (article 5.1 of the Escrow Contract), Escrow Europe Industrial is entitled to release the Specifications of the Design, Product or Production Process to a Client under the provisions of an agreement.
In general Escrow Europe Industrial offers two types of agreements:
A. In case of deposit on behalf of one Client a three party agreement between the Supplier or Industrial Designer, Client and Escrow Europe Industrial.
B. In case of deposit on behalf of multiple Clients a two party agreement between the Supplier or Industrial Designer and Escrow Europe Industrial, a so called Escrow Frame Agreement
The terms and conditions of the two party agreement will be transferred into "General Terms of Escrow Supplier / Industrial Designer" which can be provided to interested Clients.
The advantage of an Escrow Frame Arrangement is that there is no need to make an escrow agreement with each and every new client: one escrow agreement is set up between Escrow Europe Industrial and Supplier or Industrial Designer, where under an unlimited number of Products on behalf of an unlimited number of Clients can be deposited.
Besides of the standard contract versions as mentioned under sub A en B Escrow Europe Industrial developed a library of special contracts for specific situations like:
- Hardware escrow - Investment escrow - Joint development escrow
If the risks are directly related to the core business processes it is crucial to minimize the company's exposure and that can be done through Escrow.
Is your core business process dependent of software, an industrial formula or other vital know how you do not have?
If so, Escrow Europe Industrial provides custom tailored solutions to have that vital information safe deposited in a way that does not harm the interests of the owner/supplier of the know how.
What's more, Escrow Europe Industrial offers its longstanding experience with specialized technical services to verify the accuracy and completeness of the deposited materials, more in specific in the area of source code escrow. Finally, Escrow Europe Industrial keeps the material up-to-date during the life cycle of the product if any changes are made to the materials.
Vice versa, if you are the owner or supplier of vital know how and your client rightfully requires that know how to be safeguarded and available for as long as he needs it, you can meet that requirement without exposing the confidential nature of the material and without limiting any of your proprietary rights.
Deposit of material with Escrow Europe implies the transfer by Supplier or Industrial designer of ownership of a medium containing the specifications, building schemes, technical documentation and/or source code of an Industrial Design, System Software, Product or Production Process.
Escrow Europe Industrial verifies the Material, holds it in deposit and under normal circumstances is not allowed to do anything with it. However, given certain circumstances occurring (article 5.1 of the Escrow Contract), Escrow Europe Industrial is entitled to release the Specifications of the Design, Product or Production Process to a Client under the provisions of an agreement.
In general Escrow Europe Industrial offers two types of agreements:
A. In case of deposit on behalf of one Client a three party agreement between the Supplier or Industrial Designer, Client and Escrow Europe Industrial.
B. In case of deposit on behalf of multiple Clients a two party agreement between the Supplier or Industrial Designer and Escrow Europe Industrial, a so called Escrow Frame Agreement
The terms and conditions of the two party agreement will be transferred into "General Terms of Escrow Supplier / Industrial Designer" which can be provided to interested Clients.
The advantage of an Escrow Frame Arrangement is that there is no need to make an escrow agreement with each and every new client: one escrow agreement is set up between Escrow Europe Industrial and Supplier or Industrial Designer, where under an unlimited number of Products on behalf of an unlimited number of Clients can be deposited.
Besides of the standard contract versions as mentioned under sub A en B Escrow Europe Industrial developed a library of special contracts for specific situations like:
- Hardware escrow - Investment escrow - Joint development escrow
Active escrow to protect IP and users
In the current economic climate, companies are more vulnerable because of increased financial and operational risks. Many organizations are dependent in their day-to-day activities on third-party technologies.
Dependency implies risk. Even established firms can suddenly run into problems resulting from unforeseen causes such as mergers or accounting scandals. Startup companies are generally considered more risky.
A company that is using technology and software applications for important business processes has to secure its business continuity in the event that the supplier is no longer able to fulfill his obligations.
In that case, an escrow agreement can offer an optimal solution, since it is a common and effective tool to protect the interests of all parties. The supplier deposits the source code and the accompanying documentation with an escrow agent.
In situations defined in the contract, for example bankruptcy or inability or failure to fulfill maintenance commitments, the user can request that the escrow agent release the deposit to his possession for internal use only of support and maintenance. Thus, the escrow arrangement provides the end user business continuity of applications without adversely affecting the supplier.
Technology escrow includes software source codes, manufacturing files, schematics, prototypes, bill of materials, and data escrow.
Israeli companies especially startups are very appreciated by customers abroad for their innovative technology, but are perceived as having higher than average risk. An escrow arrangement, managed by a reputable international escrow agent, can therefore mitigate the risks associated in the licensing transaction, and assist in closing the sale of the technology.
Quality deposit and legal right to use
Active Escrow is the modern escrow arrangement that handles all vital elements needed for an effective release of the deposited material: legal, technical and administrative. The old Passive Escrow agreement that was been handled by lawyers and bank trust companies is usually ineffective.
An active escrow arrangement assures that the deposited material can effectively generate the end user's product without having the supplier expose his Intellectual Property to the end user. In the arrangement the escrow agent, as a neutral and trusted party, verifies the deposit and thereafter follows up to receive updates and upgrades of the deposited material.
Technology escrow is also effective for suppliers. With an escrow arrangement, suppliers take a positive approach towards meeting the growing customer's needs, while protecting their most valuable know-how: their IP.
The supplier creates a positive confidence builder to his customers, sidesteps unnecessary discussions, which shortens the sales negotiation cycle.
Dependency implies risk. Even established firms can suddenly run into problems resulting from unforeseen causes such as mergers or accounting scandals. Startup companies are generally considered more risky.
A company that is using technology and software applications for important business processes has to secure its business continuity in the event that the supplier is no longer able to fulfill his obligations.
In that case, an escrow agreement can offer an optimal solution, since it is a common and effective tool to protect the interests of all parties. The supplier deposits the source code and the accompanying documentation with an escrow agent.
In situations defined in the contract, for example bankruptcy or inability or failure to fulfill maintenance commitments, the user can request that the escrow agent release the deposit to his possession for internal use only of support and maintenance. Thus, the escrow arrangement provides the end user business continuity of applications without adversely affecting the supplier.
Technology escrow includes software source codes, manufacturing files, schematics, prototypes, bill of materials, and data escrow.
Israeli companies especially startups are very appreciated by customers abroad for their innovative technology, but are perceived as having higher than average risk. An escrow arrangement, managed by a reputable international escrow agent, can therefore mitigate the risks associated in the licensing transaction, and assist in closing the sale of the technology.
Quality deposit and legal right to use
Active Escrow is the modern escrow arrangement that handles all vital elements needed for an effective release of the deposited material: legal, technical and administrative. The old Passive Escrow agreement that was been handled by lawyers and bank trust companies is usually ineffective.
An active escrow arrangement assures that the deposited material can effectively generate the end user's product without having the supplier expose his Intellectual Property to the end user. In the arrangement the escrow agent, as a neutral and trusted party, verifies the deposit and thereafter follows up to receive updates and upgrades of the deposited material.
Technology escrow is also effective for suppliers. With an escrow arrangement, suppliers take a positive approach towards meeting the growing customer's needs, while protecting their most valuable know-how: their IP.
The supplier creates a positive confidence builder to his customers, sidesteps unnecessary discussions, which shortens the sales negotiation cycle.
Software Escrow
Software Escrow was introduced approximately 20 years and originates from the United States. In the past, a Software Escrow was merely the physical storage of the source code in a vault by a TTP (Trusted Third party). The aim is that the source code remain available even if the supplier no longer existsAt Escrow Europe, a Software Escrow is a arrangement providing technology users the assurance of access to verified source code and associated documentation. The release grounds are contractually determined. Thanks to proven verifications methods, the source code can be analysed to ensure a high level of guarantee. Escrow Europe initiates - in accordance with the agreed frequency - the active follow-up of deposits of updates and new releases; thus to safeguard that the materials in deposit are current.
Software Escrow is of interest for all companies and organisations using business critical software. If other words, software which is important for the business continuity such as tailor made enterprise software. The intellectual property rights of the products remain unimpaired with the supplier's.
The escrow contract is the starting point of every escrow arrangement. Before materials can be provided or verification can commence, all parties involved need to reach an agreement on many imperative matters. Such as: a) who are the parties (supplier, beneficiary and Escrow Europe), b) what is being deposited, c) which verification level, d) what are the release grounds, e) how many updates are deposited per year, f) what happens when parties do not stick the agreement.
There are two types of Software Escrow agreements:
3-Party agreement
This agreement is intended for one user as the only beneficiary. The agreement is closed between supplier, one user and Escrow Europe.
2-Party frame-agreement
This is an agreement between supplier and Escrow Europe. All licensees/users of the software supplier automatically become a beneficiary of the escrow contract
escrow solutions
Organisations are increasingly dependent on crucial assets which they do not own or control - such as the software behind business-critical functions, managed internally or through an outsourcer, or industrial product designs supplied by a third-party.
Escrow is a straightforward process where an independent provider holds a copy of these assets, with the supplier's agreement, on the end user's behalf under an Escrow Solution. This ensures that if the supplier's business fails or they do not maintain their contractual obligations, the material can be accessed and released to the user quickly and legally, leaving them free to carry on without disruption.
NCC Group protects over 13,500 clients worldwide with the most comprehensive Escrow Solutions available. Our clients include both end-users and suppliers, who use Escrow Solutions to reassure their customers of their stability and commitment to best practice.
Each client is allocated a dedicated account manager who guides them through the Escrow process from advising them on the most appropriate Escrow Solution for their needs to ensuring the necessary paperwork is completed correctly.
Escrow is a straightforward process where an independent provider holds a copy of these assets, with the supplier's agreement, on the end user's behalf under an Escrow Solution. This ensures that if the supplier's business fails or they do not maintain their contractual obligations, the material can be accessed and released to the user quickly and legally, leaving them free to carry on without disruption.
NCC Group protects over 13,500 clients worldwide with the most comprehensive Escrow Solutions available. Our clients include both end-users and suppliers, who use Escrow Solutions to reassure their customers of their stability and commitment to best practice.
Each client is allocated a dedicated account manager who guides them through the Escrow process from advising them on the most appropriate Escrow Solution for their needs to ensuring the necessary paperwork is completed correctly.
Subscribe to:
Posts (Atom)