Re: Escrow Services for Source code

[Patrick Townsend <townsend@xxxxxxxxxxxxxx>]

James,

I'm in complete agreement with almost everything you've said. You've
been much clearer and succinct than I could have been. I would take
exception with your last point, however. I'm very proud of the kind of
code we create, and we never try to handcuff a client into a services
agreement. Personally, I think there are good reasons to be on a
maintenance contract with us, or to use our services, but it is entirely
the choice of our customers and we never penalize a customer for going
it alone. In fact, we bend over backwards to help customers who are not
on a maintenance agreement if they need it. We live by our reputation
and I know that "what goes around, comes around." 

Unlike with manufacturing or financial applications, however, customers
almost never want to modify our applications. And, as a global company,
I've come to understand well the risks of releasing source code into
less well regulated environments. In fact, our international
distributors strongly discourage us from doing this. So, I think there
are good reasons for not releasing source code. It might make sense for
some applications, but not others.

Your thoughts?
Patrick

James W Kilgore wrote:
> 
> 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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-- 
IBM AS/400 communications, FTP automation, and network security
software and consulting services.

http://www.patownsend.com

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