Legal background to the bankruptcy case

With the opening of bankruptcy proceedings, the software producer loses the right to dispose of its assets. All attachable assets, regardless of where they are located, form the bankruptcy estate from which creditors are satisfied (Art. 197 para. 1 Federal Debt Collection and Bankruptcy Act, SchKG). Consequently, all assets of a bankrupt software producer, such as its hardware and also its copyrights and other rights to software and intangible goods, fall into the bankruptcy estate. This means that a data carrier that has been deposited with any escrow agent will subsequently often be claimed (admassed) even if the data carrier is still owned by the manufacturer. In the event of a penalty, the escrow agent is obliged to hand over the deposited object to the bankruptcy trustee (Art. 232 para. 2 no. 4 SchKG).

(unsuitable) alternative software escrow models

In practice, supposedly alternative software escrow models are also used: For example, in order to achieve the desired security, licensees try to get a software producer to hand over and deposit the encrypted source code with the licensee. However, this ignores the fact that even if the key is handed over in order to decrypt the source code in the event of a surrender, the data carrier handed over is not the property of the licensee. Consequently, the licensee is obliged to surrender the data carrier to the bankruptcy estate. In addition, the licensee must in any case be contractually guaranteed the rights of use to process the source code in the event of surrender.

In other cases, software manufacturers offer to deposit the source code in a safe deposit box at a bank, whereby access can only be granted jointly by both parties. The obligation to act jointly leads to unresolvable stalemates in the event of disagreements, which make access impossible. Furthermore, the unclear ownership situation of the deposited objects inevitably leads to the admassage of the deposited object.

The right contract – with SWEAG’s know-how

The right contract design is therefore an important core element of a software escrow agreement in order to ensure that the deposit is insolvency-proof. The central point is that the escrow agent acquires fiduciary ownership of the object of deposit. With such a clause, the escrow agent obtains the property right of the object of deposit. The ownership of the data stored on the escrowed data carrier and the intangible rights, however, remain unaffected. Fiduciary ownership means that the escrow agent becomes the sole owner of the data carrier under the law of property, but at the same time holds it in the interest of a third party. He is, so to speak, an “owner by mandate” who, under certain circumstances, must give one or more authorised persons access to the object of deposit. In the absence of these contractual arrangements for the transfer of ownership, the escrow agent merely becomes the owner in the sense of a deposit agreement pursuant to Art. 472 et seq. OR and not the owner and would be obliged to hand over the property to the bankruptcy authorities in the event of bankruptcy of the software producer.

Thanks to the tried and tested, established software escrow agreements, SWEAG acquires fiduciary ownership of the deposit object. In the event of bankruptcy of the depositor, the deposited object therefore does not fall into the bankruptcy estate of the depositor.