Picking up where we left off last week, below are some additional key issues to consider and address when negotiating source code escrow provisions.
- Duration of Source Code Use. The license grant following the source code escrow release event should specify the duration of the customer’s source code use rights. Typically, the source code license rights will have the same duration as the customer’s original license rights under the license agreement, as they may be renewed by the customer. This approach is consistent with section 365(n) of the U.S. Bankruptcy Code. Two typical source code use durations are as follows:
- If the original license is a term license and the customer elected to retain the license under section 365(n), the source code license would have the same term. The customer would have the right to renew the source code license using the same methodology as would be applied to renewals of the original license rights in the license agreement.
- If the original license is perpetual, the source code license would also be perpetual.