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How does that work exactly? They have rights to get a 3rd party to maintain the product if the original vendor goes out of business?

elric 2y ago
They can either maintain it themselves, or let another party do it for them, indeed. The contracts specify under which circumstances the code can be released, but usually it's going out of business or cancelling a product. It's something we had to deal with in a previous job where we (as a small company) sold products to Global 500 companies. Either we agreed to this, or there would be no deal. Every time we released a new version to those clients, we would place the updated source code (along with documentation and tooling etc) in escrow.
- csdreamer7 2y ago
  Ty for the info. What exactly is escrow for source code? Some party you paid to upload a tar.gz to an sftp server?
  - eichin 2y ago
    When I've done it in the past, it was a vaguely tech-savvy law firm (the hard part isn't really the storage, it's the "evaluate the conditions of the escrow contract release terms".) (IIRC recommended by the customer but we had some independent validation - I think one of our VC's law firms had dealt with them before?) We also had to details on how to actually build the product from the source, though I think they mostly just trusted us on that as long as we supplied a separate document - and by trusted, there were penalties spelled out in the contract about that too. (We were in good shape releng-wise but I expect a lot of companies would have to clean up their act to actually comply with that part.)
    - xp84 2y ago
      Those release terms are interesting to think about. I’m wondering how to spell out in a contract the difference between selling your company to a firm which will maintain the software well vs selling it to someone who will ruin it and/or do the most bare minimum? How can one draw the line?
  - elric 2y ago
    Escrow in general refers to a third party acting as an intermediary trusted by both parties. This works for source code, but also for money, goods, or anything else. Say if I want to buy a large diamond from you, you hand it over to the trusted escrow service, I give them a big pile of money. Once they have the money, they give me the diamond, and then give you the money. Only in the case of source code, I give them the code, and they won't give it to you until I go out of business. They get paid for that, of course. In our case, we uploaded source code an escrow service's servers.

elric 2y ago

They can either maintain it themselves, or let another party do it for them, indeed. The contracts specify under which circumstances the code can be released, but usually it's going out of business or cancelling a product. It's something we had to deal with in a previous job where we (as a small company) sold products to Global 500 companies. Either we agreed to this, or there would be no deal. Every time we released a new version to those clients, we would place the updated source code (along with documentation and tooling etc) in escrow.

csdreamer7 2y ago
Ty for the info. What exactly is escrow for source code? Some party you paid to upload a tar.gz to an sftp server?
- eichin 2y ago
  When I've done it in the past, it was a vaguely tech-savvy law firm (the hard part isn't really the storage, it's the "evaluate the conditions of the escrow contract release terms".) (IIRC recommended by the customer but we had some independent validation - I think one of our VC's law firms had dealt with them before?) We also had to details on how to actually build the product from the source, though I think they mostly just trusted us on that as long as we supplied a separate document - and by trusted, there were penalties spelled out in the contract about that too. (We were in good shape releng-wise but I expect a lot of companies would have to clean up their act to actually comply with that part.)
  - xp84 2y ago
    Those release terms are interesting to think about. I’m wondering how to spell out in a contract the difference between selling your company to a firm which will maintain the software well vs selling it to someone who will ruin it and/or do the most bare minimum? How can one draw the line?
- elric 2y ago
  Escrow in general refers to a third party acting as an intermediary trusted by both parties. This works for source code, but also for money, goods, or anything else. Say if I want to buy a large diamond from you, you hand it over to the trusted escrow service, I give them a big pile of money. Once they have the money, they give me the diamond, and then give you the money. Only in the case of source code, I give them the code, and they won't give it to you until I go out of business. They get paid for that, of course. In our case, we uploaded source code an escrow service's servers.