Feeds

Recession forces software escrow releases to jump by 150%

Save the code, save your world

Remote control for virtualized desktops

A software escrow provider has reported a 150% increase in source code releases in 2009, compared with 2008. NCC Group said businesses’ relationships with software suppliers have been strained by recessionary pressures.

Software escrow is the holding by a third party of the crucial, and secret, source code that underpins a piece of software. That is 'released' to a customer if the supplier goes bust or fails to meet pre-agreed support or development obligations.

The release of the source code allows the customer to carry on using the software with support from third party developers when the supplier has gone out of business or failed to meet its contractual obligations.

NCC Group has said that the number of 'releases' of source code in 2009 is up 150% from the number in 2008. It said the increase was a result of the recession that has swept the UK and much of the world.

"As with so many supplier-customer agreements in 2009, a number of software providers have struggled to stave off insolvency and have seen client relationships tested as a result," said Jon Leigh, operational director for escrow for NCC. "The devastating effects of the downturn are well documented, and for businesses suffering during the recession, losing essential software could be the final nail in the coffin. The potential for software companies to become bankrupt is very real."

NCC would not disclose the actual number of releases involved, but Leigh told OUT-LAW Radio in 2008 that it released in "no more than about 50 a year" of the 8,000 escrow agreements it manages. If the figure for 2008 was 50 then last year NCC would have made around 125 releases.

Leigh told OUT-LAW Radio that there are four release events in a standard NCC contract. "One of which is going out of business, one of which is ceasing to trade which is pretty much the same thing but they decided to do so," he said. "Another one is failure to maintain, which means they have failed to carry out contractual maintenance obligations."

"The fourth one is assignment. [This is when] the software provider actually assigns the IPR [intellectual property rights] in the software to another company. That other company also needs to take over the obligations the escrow agreement and if they fail to do so within a certain timeframe that also constitutes a release event."

You can hear a OUT-LAW Radio report on 'How software escrow could help you keep software suppliers in line' here.

Copyright © 2009, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

Choosing a cloud hosting partner with confidence

More from The Register

next story
Be real, Apple: In-app goodie grab games AREN'T FREE – EU
Cupertino stands down after Euro legal threats
Download alert: Nearly ALL top 100 Android, iOS paid apps hacked
Attack of the Clones? Yeah, but much, much scarier – report
Microsoft: Your Linux Docker containers are now OURS to command
New tool lets admins wrangle Linux apps from Windows
Bada-Bing! Mozilla flips Firefox to YAHOO! for search
Microsoft system will be the default for browser in US until 2020
Facebook, working on Facebook at Work, works on Facebook. At Work
You don't want your cat or drunk pics at the office
Soz, web devs: Google snatches its Wallet off the table
Killing off web service in 3 months... but app-happy bonkers are fine
prev story

Whitepapers

Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
How to determine if cloud backup is right for your servers
Two key factors, technical feasibility and TCO economics, that backup and IT operations managers should consider when assessing cloud backup.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Protecting against web application threats using SSL
SSL encryption can protect server‐to‐server communications, client devices, cloud resources, and other endpoints in order to help prevent the risk of data loss and losing customer trust.