The Many Faces of Technology Escrow

Topics: Technology Escrow

Storing intellectual property and key technology assets with a trusted escrow provider builds trust between a technology provider and its customer. There are many ways to go about it, depending on each party’s business, legal and compliance needs.

If you’re in the business of selling complex software or technology, part of your pitch is convincing potential clients you’re in it for the long haul. Customers need reassurance that they’ll never lose access to the key technology components required to stay up and running.

If you’re the client who’s buying that mission-critical technology, you need to be convinced the seller is serious. Reputation may not be enough. Where’s the assurance that the technology you buy will remain functional and supported throughout its life cycle?

For both buyer and seller, technology escrow is that promise. Simply put, sellers (or licensors) of technology, software or almost any type of intellectual property “deposit” it with a trusted, independent third party. the technology will be available to the buyer (or licensee) when needed. The third party holds the source code and releases it if the terms of the escrow agreement are met. In those cases, licensees will gain access to the source code for their mission-critical software and technologies. This mutually beneficial arrangement makes it easier and safer to buy and sell technology.

Escrow Services: Variations on a Theme

Technology providers and their customers can choose among a range of escrow options and related services. Each of the following tools addresses a different type of intellectual property storage and protection challenge:

  • Software escrow protects source code and other components related to on-premise licensed software solutions.
  • SaaS escrow secures Software-as-a-Service (SaaS) or cloud-based applications and technologies.
  • Escrow verification confirms an escrow deposit’s completeness through a series of tests.
  • IP litigation discovery escrow protects intellectual property during the legal discovery process. In this case, the escrow provider acts as a trusted, neutral third party during litigation.
  • Designated third-party compliance is a validation service for broker-dealers seeking to prove compliance with SEC archiving regulations.
  • Domain name data escrow helps domain name registries and registrars maintain ICANN compliance.

Developers: Consider Establishing a Process

As a technology developer, your goal is to protect your intellectual property investment while giving customers the assurance that their purchase of your software or technology is equally safe. Follow a simple and legally solid escrow process that meets the needs of your company and customers, and you’ll likely find that your sales negotiations go more smoothly. This especially holds true if you’re a smaller company looking to establish a reputation for long-term staying power.

Find an escrow service provider with legal expertise—one that truly understands how escrow works and what terms are necessary in an escrow agreement. The escrow service provider can also help balance your need for confidentiality with your customers’ need to protect their investment in your technology. Establishing escrow terms and processes may seem a bit intimidating and dauntingly legalistic, but once established, such measures instill confidence in your prospects and customers.

For the User: Experience a Lower-Risk Purchase

As a buyer of technology solutions critical to your company, your decision-making is hard enough without worrying that your potential technology partner might leave you in the lurch with code or processes that can’t be reinstalled, maintained or upgraded. You want some control over the future of the technology you use. You need to make a safe purchase. Look for an escrow agreement your management and your developer can both accept. You’ll rest assured that what’s been put into escrow is complete, functional and there for you when you need it. Escrow agreements exist to make sure your business stays up and running—no matter what.

Invest in a Clearer Vision of the Future

Though escrow is negotiated between sellers and buyers of technology solutions, it’s born of collaboration rather than conflict. Think of it as insurance to reduce the risk for both sides. Developers can protect their intellectual property and prove their staying power; users can buy with confidence, knowing the tough choices they have to make about critical technology purchases aren’t affected by concerns about future access. Given the current information economy, where ideas are a business’ most valuable asset, protecting those concepts is your top priority.

Iron Mountain Suggests: Picking the Right Partner

Having a software escrow agreement in place can help drive business. And picking a trusted partner with a solid reputation can help:

  • Build trust. Software escrow can put customers’ minds at ease. Enhance that by working with a provider with proven expertise.
  • Create an audit trail. Locking code in your lawyer’s safe won’t show development history and validate ownership.
  • Deliver convenience. Secure electronic deposits let you update or access your software quickly.
  • Manage your assets. The Iron Mountain Escrow Management Center lets you manage all of your software escrow accounts securely from any location.

Do you have questions about software escrow services? Read additional Knowledge Center stories on this subject, or contact Iron Mountain’s consulting services team. You’ll be connected with a knowledgeable product and services specialist who can address your specific challenges.

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