Software Escrow - The Editors desk

The source code escrow does indeed offer a significant amount of protection for software licensees against vendor bankruptcy. As noted prior, because of the gaps left open in the Code, the amendments fall short of providing a software licensee with adequate protection. However, the escrow does not in and of itself provide an adequate level of protection sought by licensees. Nevertheless, this practice can be an extremely effective source of protection for licensees when used in conjunction with a meticulously drafted licensing and escrow agreement. There are certain points a licensee should be sure to include in its licensing and escrow agreements to maximize the protection of the escrow.

First, the licensee should negotiate a clause that gives the licensee the right to decide when an event triggering release has occurred. In addition, the licensee should include terms in the escrow agreement that clearly spell out which events are “triggering events” for release of the source code.