Staking
Out Intellectual Property Rights
By Ted Hughes, Senior
Correspondent
LocalBusiness.com Business
Profile, July 19, 2000
Software escrow is one of those
terms. It's right up there with
double indemnity and term life.
They all have a vaguely tomb-like
quality to them.
If you're not in just the right
frame of mind when you hear it,
you'll feel the air in the room
go thick on you. As your own
indifference engulfs you, the guy
who's telling you about software
escrow will recede into the wrong
end of the telescope.
Jim Ford swims daily in the
choppy waters of that sea of
indifference.
But, really, once he manages to
get your attention, software
escrow gets interesting. Really.
Ford explains that even he was
pretty baffled by the term the
first time he heard it.
"I got an e-mail from a
friend in Bryan who's an
attorney, asking if I knew
anything about software escrow.
One of their lawyer's needed it
for a client. I said I'd check
into it."
Ford ran every trap he knew, but
came up dry.
"After 15 years of legal and
technical publishing in the
Silicon Hills of Austin I'd never
heard of this," he recalls.
"I thought nobody here is
doing this? It hit me like a
lightning bolt."
The lightning bolt was Ford's new
business idea, and that has
evolved into his company,
Guard-IT Corp.
What Ford has learned since he
began to explore software escrow
-- basically title insurance for
geeks -- is that it is a rather
useful tool.
Guard-IT Corp. simply acts as a
trusted third party with whom a
software maker, or anyone with
intellectual property, can store
the IP. Doing that establishes
legal ownership. If a developer
has investors, it's also a good
way for them to secure the assets
they're investing in. All this of
course is supposed to minimize
legal disputes should the deal go
sour.
"It doesn't replace a
patent," Ford says,
"but if you're not going to
spend the time and money to
pursue a patent, go ahead and put
it into escrow, because you're
going to get IP protection right
away."
It also is a useful way for
developers who are new to the
business to establish credibility
with potential business partners
and customers, Ford says.
"When they're in the first
or second year of
operation," Ford says,
"a developer may have his
product all developed and he's
going out to sell it. It's going
to hit him in the face. The first
guy that's bigger is going to
say: 'yeah, I love your product.
You're a nice guy. But we really
don't know you from Adam, and we
need some assurance that our
investment in your product will
be covered.'"
Software escrow, Ford says, might
sound like a velvet-lined tomb,
but it's really just another way
to protect your intellectual
property. Really.
Company Name:
Guard-IT Corporation
Industry:
Intellectual property protection
Product/Service:
Guard-IT is an independent,
third-party escrow company that
secures intellectual property
(IP), including software source
code, proprietary material (e.g.,
databases, business plans). The
escrow agreement authenticates
the developer's ownership and
first-use, and protects the
beneficiary's investment in the
intellectual property.
Year Founded:
1999
Management:
Founder and CEO Jim Ford managed
a number of technology, business
and legal publications in print
and online, including at the Austin
Daily Record and the Austin
American-Statesman.
Investors:
Self-funded
Strategic Partners:
Guard-IT has signed an agreement
with PricewaterhouseCoopers, LLP,
naming the software and
intellectual property escrow
company as a seat-holder in
connection with PwC's
Intellectual Property Exchanges
("IPEX"). Guard-IT also
has a marketing alliance with
Associates Business Services, a
member of the 900-member
International Business Brokers
Association. The company is also
in confidential negotiations with
a major online B2B marketplace
and a computer hardware
manufacturer.
Customers:
Representative technology
development clients include Dark
Horse Systems, Semantic Designs
and Innovative Software
Solutions. Beneficiaries include
Micron Technology, Rockwell
Software and Landata Systems, a
subsidiary of Stewart Title
Company.
Competitors:
DSI, Ft. Knox
Fiscal Year
Revenues/Profit: Would
not disclose.
Strategy: Cut
the "paper chase" for
software developers by offering
an online form to expedite their
escrow. Cut out the fees and
paperwork of enrolling and
administering beneficiaries for
the developer. The goal is to
serve an intellectual property
market that goes well beyond
software source code. Form
alliances to broaden protection
for buyers and sellers of
technology and intellectual
property.
What Keeps Them Awake at
Night: The numerous
applications and opportunities
for rapid growth in both domestic
and foreign markets. The whole
technology industry, even the
general business community, is
beginning to focus on the need to
protect intellectual property
rights and secure investments in
technology and innovation.
Third-party escrow will be to
technology transfer what title
insurance is to the mortgage
industry.
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