FIRST  GERMAN  ESCROW *

What FGE does

Software Escrow means deposit of the source code of mission critical software into an account held by a third party, an escrow agent. Software Escrow is typically requested by one party, who is licensing software (the licensee), to ensure the maintenance of the software. The software source code is released to the licensee if the other party (the licensor) files for bankruptcy or otherwise fails to maintain and update the software as promised in the software license agreement.

FGE is acting as a neutral institution and trustee for software vendors and large IT end user accounts in the area of source code depositing  to save investments into expensive software and to make sure that the continuity of mission critical software processes in large companies can be granted any time.

FGE checks whether the material as agreed upon in the escrow contract is present and readable. These validations are made both on inititial deposits and on following deposit updates. Once a year the licensor is requested to deposit the latest version of the product.

First German Escrow stands out from other escrow agents because it does not only focus on full verified deposits, but as well looks out for the needs of various licensors, who do not wish to lay out all of their "top secrets" to an escrow agent. FGE offers the solution.

The release of the deposit does not always mean that you are entitled to use it. FGE has more than 21 years experience and the required legal skills to draw up a contract that works. The deposit can also be of prime importance as a legal evidence in copyright issues.

FGE acts as a neutral party - without bias towards on of the parties. We work under the conditions agreed upon by all parties signing the escrow contract. Our business and reputation would be without success if we failed in this area. This is one of the reasons why it is not recommended that attorneys act as an escrow agent - with the obvious conflict of interest. Another reason is that attorneys do not verifiy the material and would store an unverified media, perhaps containing unusable material. A notary is forbidden to do so. FGE advises you on the best set-up on a tailor-made escrow agreement and verify the material and store it safely, not in the cloud, but physically at a safe place. FGE will never use or sell deposited material.

Some licensors may hesitate to establish an escrow account for fear that escrow negotiations would only lengthen and complicate the sales process, which is in most cases not even short. However, licensors that offer escrow protection to their customers up-front may actually help their own cause ! By offering escrow as a value-added service to their licensees, licensors can quickly move away licensee`s concerns about sustaining technical support or other concerns. Another advantage for the licensor is that he can rest assured that the expertise he has built up is not lost, if an employee leaves. A complete, documented set of his material is always available to fall back on, if an escrow deposit has been installed.

Next question is what happens, if the escrow agreement is moot ( in discussion, esp. of a hypothetical legal case) and the licensee can be blocked from gaining access to the source code, if the licensor objects to the release request. Because of its neutrality FGE do allow for licensors to oppose a licensee`s release request. But this does not force the licensee into lengthy court proceedings before gaining access to the code. A low-cost, quick and decisive alternative to the courts is mediation and afterwards arbitration.  As soon as FGE receives contrary instructions from the licensor not to release the escrowed material, parties of the agreement are notified, that there is a dispute to be solved by mediation and arbitration.

A verification on a basis level ( level I) is done for each and every deposit escrowed with FGE. This verification is generally performed in-house of FGE. Cost for this level of verification can be included in the yearly fee. It ensures that the deposited media are readable and whether the components as agreed upon in the escrow contract are present and in a readable form. This verification however does not guarantee that the material in deposit represents an accurate and complete reflection of the software currently operational at clients' site. A furthermore verification by additional costs, such as compilation of source, will only take place, if all of the parties agree to it.