Source code escrow

Source code escrow is the mechanism by which a software publisher deposits the source code and associated documentation with a trusted third party, who must release them to the customer in cases defined by the agreement. It protects the customer against the disappearance or failure of the publisher, while preserving the secrecy of the code as long as the publisher performs its obligations. Source code escrow supplements the software licence and the Computer maintenance contract.

How source code escrow works

First, a three-party agreement binds the publisher, the customer and the escrow agent, which may be a specialised body, a bailiff or a notary. Next, the publisher deposits the source code, the build tools and the documentation, and updates the deposit with each significant version. Then the agreement defines the release events: judicial liquidation of the publisher, discontinuation of maintenance, serious unremedied breach, transfer of the software to a third party that refuses to continue the contract. Finally, it organises the release procedure, with a period for the publisher to object, and the extent of the customer’s rights in the released code, generally limited to maintenance and internal use.

Points to watch

An escrow is only worth something if the deposit is complete, up to date and usable. The customer has an interest in providing for verification of the deposit by the escrow agent or an independent expert, covering compilation and correspondence with the version in production. The agreement must also deal with third-party and open source components and the licences needed for rebuilding. The deposit also serves as proof of the date and content of the code, useful in an Infrigement dispute or a claim of rights. The applicable copyright rules can be consulted on Légifrance.

Key points

In practice, source code escrow is essential for critical software developed by small publishers, and it is often required by large accounts and regulated players. It is negotiated when the licence is concluded, with an allocation of costs. The firm drafts these agreements and acts in contested release procedures, as presented on the page contracts.