Source Code Escrow - Necessity of Escrow

Necessity of Escrow

As the continued operation and maintenance of custom software is critical to many companies, they usually desire to make sure that it continues even if the licensor becomes unable to do so, such as because of bankruptcy. This is most easily achieved by obtaining a copy of the up-to-date source code. The licensor, however, will often be unwilling to agree to this, as the source code will generally represent one of their most closely guarded trade secrets.

As a solution to this conflict of interest, source code escrow ensures that the licensee obtains access to the source code only when the maintenance of the software cannot otherwise be assured, as defined in contractually agreed-upon conditions.