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Source Code Escrow

Posted by michael on from the my-precious dept.

Makarand writes "According to this article in The Economic Times (India) Software companies in India are embracing the trend where source code for the software being bought or sold is kept safe with an escrow agent with carefully drafted agreements. This allows the buyer to get hold of the source code in cases where software was licensed from a start-up which has now folded or a breach of contract regarding the maintenance services that were agreed upon can be proven. The source code is automatically released upon the occurrence of any of the events mentioned in the escrow agreement and the buyer will be able to study the source code and continue to provide support services for the software bought without relying on the employees of the software supplier."

2 of 182 comments (clear)

  1. Not a new idea ... by taniwha · · Score: 5, Interesting

    not just something that happens in India ... I put source into escrow as part, of a contract at least 15 years ago, and it certainly wasn;t a new idea then

  2. Re:source code escrow not very useful by __aanekd3853 · · Score: 5, Interesting
    If the developer goes out of business, getting the source code by itself is almost always useless: almost no single customer will have the resources to maintain and extend it. Source code is only cost effective if there is a community of users and developers, and that requires releasing the code under an open source license ahead of time.

    Bzzzzt! Wrong. Code is usually put in escrow after a team of developers, either from the client or a third party, examines it (under an NDA) and comes to a conclusion that if the vendor goes bust they would be able to maintain it. This gives the client the option that their own people or a third party could take over if need arises.

    Microsoft source code isn't their crown jewels, as they always claim: even if people got access to it, they couldn't develop and maintain it anyway.

    Microsoft code will not be put under escrow any time soon, I suspect. The arrangement usually fits the situation where a small software vendor (e.g. a startup) delivers a software product to a bigger company. The bigger company is concerned that the small vendor may go under, but they have some assurance that they - or another software company - can pick maintenance up with the escrow code. Since they are big compared to the vendor the additional resources will not be prohibitive. They were paying the vendor for support, too. Now they will be paying someone else, or allocate a few people of their own.

    What is put in escrow is negotiated - this would normally include everything that is needed to maintain the product, including a working build system, older revisions and logs, documentation, etc. Again, the package is examined before put in escrow, and someone whom the client trusts says, in a pinch I will be able to do it.

    Normally the client would still prefer the vendor to stay afloat and provide the service though. Escrow is the second line of defense, and as such it is useful. From the clients point of view it is open source, but they are not in a rush to modify or redistribute it.