| Updating
the Escrow Deposit Materials "The Escrow
Update"
September 2009 Issue
"We
signed an escrow agreement and made an initial
escrow deposit, now what?”
With
a proper escrow deposit in place (see July 2009
edition), how often should it be updated?
Does
it even need to be updated? Some intellectual
property escrow deposits like diagrams, models,
designs and formulas are static and do not need
to be updated. But in our experience and in most
cases, the product does change from time
to time as it’s modified or improved by the
Depositor – and when the product changes,
the escrow deposit should also change.
Rule
of thumb: Update the escrow deposit by sending a
copy to the escrow agent after every new version
or major revision of the product (ie, software)
is released or made available to the Beneficiary.
While it’s not always prescribed in such
detail, some escrow agreements are written to
specify monthly, quarterly or annual updates
regardless of any production or release schedule.
Escrow
deposit updates are very important to BOTH
parties to the escrow agreement.
For
the Depositor, timely updates ensure that the
product’s "anthology" is safely
kept off-site, protected not only physically but
also from an intellectual property rights
standpoint: The escrow agreement itself
authenticates the Depositor’s ownership by
contract, rather than by dispute or litigation.
Further,
while we do not consider escrow deposits as
emergency backup, we have had many cases when
Depositors call us in a panic, informing us that
their internal systems or backups had crashed and
WE had the only other copy of their product or
source code in existence! Talk about affordable
protection…escrow is a
“no-brainer”.
Deposit
updates are pretty obvious from the
Beneficiary’s point of view. For most
Beneficiaries who consistently upgrade their
technologies, a current escrow deposit would be
the Depositor’s latest version. For those
who are content with version 2.0 and not
upgrading to 3.0 or 4.0, the older version kept
in escrow would suffice. If a release condition
occurs, and as mentioned in last month’s
edition, the escrow is only as good as what is
deposited in the account, so a recent, working
version is a must.
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1999-2012 Guard-IT Corp. All rights reserved.
Page updated 01.02.2012.
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