Re: Escrow Services for Source code

Don, Patrick, et al:

Our software company, and therefore agreements with clients, have the
following basic understandings:

1) The software is and always will be property/asset of the software
company.
2) The client purchases a license to use.  There is no transfer of
ownership.
3) In the event of default by the software company, the client may
obtain a copy of the source.
4) Client copy of source prohibits distribution, for a fee or for free. 
Even in this event, title and ownership does not transfer to the client.

The reason being, that for another firm to purchase the assets
(software) and client base of a software firm in receivership, to
transfer title of code, even via escrow, would have the new owners with
many, many, many, potential competitors and therefore diminish the value
of the asset.  Not going to happen.

Personally, this is how lawyers get rich.  Every one of our clients have
all the original source code.  They also have a license agreement that
if any of the code every leaves the site we are entitled to compensation
including punitive damages.

IMHO, any software company that will not provide source code is either
ashamed of what you may see or they are trying to handcuff the client
into a services agreement.  This does not bode well for mutual trust and
collaboration.

That's just my option.  And I could be wrong. (apologies to Mr. Miller)

James W. Kilgore
email@James-W-Kilgore.com


Patrick Townsend wrote:
> 
> Don,
> 
> The software vendor retains ownership of the software (copyrights,
> patents, right to distribute, etc.). The escrow agreement provides a
> license of the source code to the beneficiary (the company using the
> software). It's a three-way agreement between the vendor, escrow
> company, and end-user. The agreement typically defines several
> "triggers" for the distribution of the source to the end-user. These
> include bankruptcy, receivership, inability to respond, and others. But,
> again, the distribution of the source in these instances is not a
> transfer of ownership - it is a license of the code. I can send you an
> example of one such agreement if you like.
> 
> Patrick
> 
> Don wrote:
> >
> > > code is not a transfer of assets but a license, it is not affected by
> > > receivership, etc. I do agree with you that using a lawyer or CPA is not
> > > a good way to escrow source - too many chances for things to go wrong in
> > > that way! But using a professional source escrow company can make good
> > > sense.
> > >
> > > Patrick
> >
> > Patrick,
> >
> > Who actually has ownership/title of what's put in the escrow repository?
> >
> > Don
> 
>
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