Archive for June 2nd, 2017

Learning The “Secrets” of Companies

Posted June 2, 2017 By Fastweb

Why Escrow Services are a Necessity

Advancement in technology has made it very important for companies to take advantage of information technology solutions to improve business processes. This has necessitated companies to license different software to meet their technological needs. The software tends to be very expensive, and it is important for both the licensor and the licensee to protect their investments. As such, escrow services have been very critical for software developers because the help protect the interests of both parties. Software escrow involves depositing the source code of the particular application with a third party. The third party is identified as the escrow agent and should have no ties to either the licensor or the licensee. Source code escrow is very important and can be initiated by either buyer or the seller of the software application.

When software is developed, it is available in either the object code format or the source code format. The licensor only gets the object code format while the developer deposits the source code format with the escrow agent. Deposing the source code with the escrow agent ensure that the software is updated and maintained on a regular basis. This is very important for the licensee since the software may be a key part of their business and this cushions then from possible losses. Escrow services are very important because they protect the businesses from the bankruptcy of the developer by ensuring that the source code is available for updates and routine maintenance. Under the escrow agreement, the developer, has the responsibility to maintain and offer support to the licensee based on the agreed terms and if this is not fulfilled, the licensee has the right to acquire the source code.

Source code escrow also benefits the software developer by protecting their intellectual property rights. The software industry has so many people who lack the creativity to create something new which discourages the developers from sharing their source code with the licensee. Source code escrow is anchored on various terms and condition which bind both parties. There are also numerous obligations for both parties. Failure to fulfill these obligations there are serious consequences. The source code escrow agreement outlines possible use or transfer of the source code which is key in protecting the rights of both parties.

The other function of the escrow agent is to verify the availability of the source code. It is also the role of the escrow service to ensure that the software is in good shape and that it offers optimal performance to the licensee. When the licensee will be using the software for an activity that is vital to the company or has a direct impact on the revenue, it is important to use source code escrow services. Also, when the price of the software is very high, it is only best to protect the investment with the use of an escrow service.

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