| 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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Page updated 06.02.2010
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