Why a Software-Escrow with SWEAG Software Escrow AG

Today, highly specialised or specifically developed software is used in every company. This creates a relationship of dependency between the software manufacturer and the software licensee. In order to be prepared in the event of a failure of the software manufacturer, your company would be well advised to conclude a software escrow agreement that allows you to access and use the source code of the software in such an exceptional situation.

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Software escrow is the deposit of software source codes, preferably together with their development documents. Software escrow offers security with regard to the long-term availability of technical know-how. In contrast to a deposit geared solely to physical security, such as a deposit in a safe deposit box or safe deposit box at a bank, SWEAG’s specialised software escrow also takes legal security requirements into account.

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By depositing the source code, the licensee, i.e. the beneficiary of the software escrow agreement, is to be enabled to perform the services owed by the software producer himself or to have them performed if the software producer does not or cannot perform the contractual services properly.

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Your Benefits

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Reasons for SWEAG’s software escrow

Aim of the involved parties

The contractual partners involved in an IT project have different requirements regarding their security. While the software manufacturer wants to protect its technology and core knowledge, the software licensee seeks security with regard to the long-term availability of this knowledge in order to protect its investment. A software escrow with SWEAG takes these requirements of both sides into account in an optimal way.

Manufacturer Failure

In the case of a business takeover, the software product may no longer have any strategic significance for the acquirer and can therefore be put into a slumber. If the software manufacturer goes out of business or goes bankrupt, not only is the necessary support no longer guaranteed, but also the necessary access to the required source codes and data – especially in the case of an ordinary deposit or safe deposit – and the fate of the copyrights is uncertain. By acquiring fiduciary ownership of the deposit objects entrusted to it, SWEAG can hand them over to the user even in the event of bankruptcy of the software manufacturer. The user may use the source code in accordance with the relevant agreement.

Project Disruptions

Massive delays in delivery, non-fulfilment or defective performance of developments, non-fulfilment of maintenance obligations or the occurrence of the so-called “end of life” of a product can impair or endanger the further use of a software. The licensee, as the entitled party, can only remedy this by accessing the source code through a software escrow solution.

Contractual Requirements

The software manufacturer is increasingly confronted with demands for security from licensees or distribution partners. In particular, large purchasers such as the Confederation, the Swiss IT Conference, Swisscom and other companies or organisations demand in their general terms and conditions of purchase that the source code be handed over in the case of certain events and that an adequate deposit of this source code be made to ensure this.

In the case of reusable or standardised products, the software manufacturer understandably wants to protect his intellectual property. They are not prepared to hand over the source code. With the help of SWEAG services, they can nevertheless satisfy such customer requests simply and quickly, either by individualised deposit for the customer concerned or by depositing his standard product for the benefit of a numerically indeterminate clientele that can be expanded at any time. The professionalism of such a deposit speaks for the seriousness of a software producer.

Advantages over banks, lawyers, trustees or other depository providers

Depositing the source code in a safe deposit box at a bank or in a safe at a lawyer’s or a trustee’s office hardly ever does justice to the mutual interests of the software producer as depositor and the licensee as rightholder. In particular, if only the software producer as depositor has access to the safe deposit box, the licensee as rightholder cannot access the source code without the depositor’s consent. And if the parties can only access the safe deposit box jointly, it is also possible for the depositor to prevent access to the source code in the event of surrender. The reverse case is also unfavourable: if the authorised party is able to access the safe deposit box alone, the depositor loses all control over the use of the deposited source code.

Another problem with safe deposit is its lack of bankruptcy protection. The bank, a lawyer or a trustee as depositary regularly does not acquire fiduciary ownership of the deposited source code. If, in such a case, the software producer as depositor goes bankrupt, the source code deposited in the safe deposit box belongs to the bankruptcy estate and is not available to the beneficiary. Moreover, lawyers and trustees usually do not have the business-specific know-how and suitable premises for depositing software.

SWEAG’s software escrow solutions, on the other hand, counter the aforementioned risks to a particular degree. With SWEAG, you benefit from the know-how established since 1992 as well as services adapted both to the state of the art and to your needs. Thanks to the needs-oriented preparation of the software escrow agreement and SWEAG’s tailor-made solutions, you will receive the professional services of SWEAG as a specialised escrow agent that are optimally adapted to your specific circumstances.

Which parties are involved in a software escrow agreement?

As a rule, it is a three-party relationship. The software escrow agreement is concluded between SWEAG (escrow agent), the depositor (software manufacturer) and the beneficiary (licensee).

To what duration is the software escrow agreement concluded?

The software escrow agreement is a permanent contract that is terminated by surrender to the beneficiary (licensee) or by return to the depositor (software producer) after expiry of the agreed period of time. The software escrow agreement is concluded for the period during which the beneficiary (licensee) is dependent on the software.

Do you have any questions?

We will be happy to advise you personally in order to demonstrate the software escrow solution tailored to your needs.

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