Software and Source Code Escrow

Learn more about what software or source code escrow is, how it’s used, and how it might benefit your company.

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What is a source code or software escrow?

Source code or software escrow is an agreement set up between a software developer or vendor (aka “Depositor” or “Licensor”), their client who is purchasing the software license (aka “Beneficiary” or “Licensee”), and a trusted, neutral third party such as Codekeeper (“Escrow Agent”). In particular, source code escrow puts a contractual obligation on the depositor to store—with a trusted escrow agent—all source code, data, build instructions, third-party tools, and any other materials that would enable the beneficiary to update or maintain the software.

Using source code escrow, the beneficiary is protecting themself from unexpected events, such as their software developer discontinuing maintenance and support of the software, running out of business, or breaching their contract in any other way. If any of these (or other) predetermined events occur (each, a “Release Condition”), the escrowed materials (i.e., source code, credentials, instructions, etc.) are then made available (released) to the beneficiary so they can ensure their operations go on uninterrupted.

Source code escrow and software escrow—what’s the difference?

“Software escrow” and “source code escrow” are terms that are used interchangeably, and they essentially mean the same thing. This is the most common type of escrow and is designed to store not only source code, but also build instructions and any other important documentation that would allow a licensee to update and maintain a mission-critical software application.

Though software and source code escrow is most commonly used for traditional on-site software licenses, they can also be used for development agreements, software acquisition agreements, and any other transactions involving software.

What materials are deposited in source code and software escrow?

Deposit materials vary on a case-to-case basis, but the following items are a good place to start when determining what you want deposited to ensure your software escrow deposit is complete:

A general description of the items that are being deposited (e.g., the size of the deposit; function of the software; integrations, utilities or third-party tools used to create the deposit; etc.)

Source code (common file types include .java, .c, .cpp, etc.)

Any applications necessary to compile and build executable code, objects, libraries... (e.g., the names of all required applications, version numbers, vendor names, and contact information)

Build instructions and design documentation (source code architecture, overall design of the source code, and interactions among modules)

Encryption information (e.g., required passwords, crypto keys, and software applications required to access the deposit)

Key developers’ contact information (emails, phone numbers, and any other relevant contact information)

Samples of any data or databases required to run the software

Benefits for software vendors

Offering source code escrow provided by a trustworthy escrow agent gives you leverage in agreement negotiations. It’s for this reason that software escrow is often referred to as “the great sales enabler”.

If your business is a newcomer in the market, source code escrow helps you establish credibility among your clients and prospects while positioning yourself on par with bigger, established competitors.

You establish confidence with your licensees by addressing their concerns upfront.

You increase security by safely storing source code and software materials in a single, consolidated location with a trusted third-party rather than across multiple places for various beneficiaries and licensees.

Software escrow helps you protect your intellectual property rights and avoid courts and litigation.

Benefits for licensees

Source code escrow protects you from unpredictable events, such as your code supplier going out of business or discontinuing maintenance and support of a mission-critical software application.

You receive the ability and documented legal right to maintain and update essential parts of the software product.

You reduce the chance of interruption or damage to your business and ensure business continuity.

You can mitigate your own concerns regarding the software vendor’s capabilities as part of a larger risk management process, which may include meeting legal requirements by demonstrating due care and due diligence.

How does Codekeeper help?

With the help of powerful automation technology, Codekeeper seamlessly integrates with developer workflows on SCM-platforms like Github, Bitbucket, Gitlab, and others, allowing it to sweep for updates to the source code and other documentation on a frequent basis. This continuous update of deposit materials not only removes the unnecessary burden of making manual deposits, but it also ensures that your materials are always up-to-date and accessible — while simultaneously helping you streamline your workflow and save time.

Our clients get a higher level of service and uninterrupted access to the entirety of deposit materials for a considerably lower price than with traditional escrow agents. You can get a plan for as low as $59 per month, with a start-up fee of only $199. This includes unlimited continuous deposits, beneficiary confirmations, and more. Even a free escrow agreement is included, which means you save additional dollars on lawyer fees.

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Further reading

Check out this guide on the Codekeeper blog for everything you need to know to get started with source code escrow. Learn more about what a software or source code escrow is, how it’s used, and how it might benefit your company.

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Get Started with Software Escrow

Codekeeper is the easy and affordable solution for software developers and publishers to save time and money and increase sales. Set up your first escrow today to protect your code and data.

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