Frequently Asked Questions
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1 FAQ INTELLECTUAL PROPERTY MANAGEMENT Escrow Verification Services Frequently Asked Questions overview The value of an escrow arrangement is heavily dependent on the quality of the deposit materials a fact increasingly recognised by users and developers. Over 70% of all deposits sent in to Iron Mountain for analysis were determined to be incomplete and required additional input from the developer in order to be compiled. You can learn about Iron Mountain Escrow Verification Services at In addition, listed below are answers to frequently asked questions about Iron Mountain s escrow verification services. We ve also included answers to common questions about software development and licensing, including definitions of technical terms. Over 70% of all deposits sent in to Iron Mountain for analysis were determined to be incomplete and required additional input from the developer in order to be compiled. Iron Mountain escrow verification faq Q. Why would I need Iron Mountain to verify my technology escrow deposit? A. A technology escrow arrangement is an excellent vehicle to protect all parties involved in licensing intellectual property, but the value of the escrow arrangement is seriously compromised if the deposit materials are incomplete. A thorough verification of the materials provides assurance that, in the event of a deposit release, the technology user (also known as the licensee or the escrow beneficiary) would be able to read, recreate and maintain the developer s technology in-house in essence, step into the shoes of their vendor. Iron Mountain s experience has shown that over 70% of deposits sent into Iron Mountain for analysis are incomplete, and therefore would compromise that user s ability to benefit from having access to the deposit materials. Most times the technology placed into escrow is software source code, but other technology can be escrowed as well. At Iron Mountain, we ve escrowed secret formulas, a jet engine and even a cookie recipe! / 1
2 Intellectual Property Management Q. What are some of the possible ramifications of an incomplete deposit? A. Should there be a release of incomplete deposit materials the following realities can result: Costs associated with replacing licensed software and hardware Lost profits and/or savings Lost time Client dissatisfaction Breach of contract(s) Costs associated with consultants fees, court costs, arbitration fees, and legal fees Costs associated with retraining personnel Q. How can Iron Mountain s verification services reduce my company s risk? A. Iron Mountain s verification services provide your company with insight into the composition of your escrow deposits. We identify what is needed to use the technology, including anything that is missing from your deposit. Iron Mountain can also recreate the technology for you. The information we collect through our analysis is developed into an easy-to-read report, which you can use as a guide to reconstruct the technology from the deposit materials, should you ever need to do so. Performing the testing to recreate the product independently, away from the developer s office or environment, is a crucial process as it replicates the conditions the beneficiary will likely experience if there is an issue with developer support. Q. What does my company need to do to use source code released from escrow? A. Your company must accomplish the following to use source code released from escrow: Obtain the deposit media provided to Iron Mountain Read the media Understand and recreate the developer s software development environment (which is often very complex) Have access to all third party tools Compile the source code Recreate executable code Install the code onto appropriate production systems Iron Mountain can perform one or more of these tasks for you when software source code is placed into escrow depending on the level of verification you select. This verification process will ensure that you can recreate these tasks if the source code needs to be released in the future. Q. When should the escrow deposit be verified? A. Iron Mountain recommends verifying a deposit at the outset when the escrow account is established. In all cases, verification should be performed before a release condition has occurred, in order to most effectively limit your exposure to risk. Q. How frequently should deposits be tested? A. This requires a cost-benefit analysis. If there is material change to the technology or if the risk profile of the developer changes detrimentally, new deposits should be verified. However, for mission-critical applications, Iron Mountain recommends testing each deposit update at some level. In less critical cases, technology users typically require testing with each major version release or bug fix. Iron Mountain s verification service levels are designed to allow for the maximum flexibility in protection during the life of the technology and escrow /
3 Q. What problems does Iron Mountain typically find with escrow deposits? A. Recent data on deposit testing has revealed the following: Over 70% of all deposits sent in for analysis were determined to be incomplete. 92% of examined deposits required additional input from the developer in order to be compiled. 38% of all verified deposits did not contain any configuration or build instructions, which are critical to putting escrowed materials into deployment. As a result, much of the software source code that is deposited into escrow is not ready to use upon release. Iron Mountain verification services ensure that any problems are resolved before storing and protecting the software source code. Without verification there could be considerable delays with creating a functional deposit. Q. How does the verification process work? A. Prior to performing verification tests, Iron Mountain requests that the software developer (depositor) complete an escrow deposit questionnaire (Exhibit Q). This enables Iron Mountain to understand the scope of the work required so that a detailed Statement of Work (SOW) and cost estimate for the testing can be prepared. The SOW is fixed price based on our experience and good faith estimates that the developer s representations are accurate on build times and adequacy of the instructions. Upon execution of the Statement of Work, receipt of payment and receipt of appropriate deposit materials, Iron Mountain begins testing the deposit. During testing, Iron Mountain notifies the parties of its progress. Once the testing is complete, Iron Mountain provides detailed reports of its findings to all parties. Iron Mountain will also follow up with a technical resource to review the test results with the user of the technology. Parties interested in requesting a verification of deposited materials should contact their Iron Mountain sales representative / 3
4 Intellectual Property Management Q. What are the types of technical verification offered by Iron Mountain? A. Level 1 - Inventory and Analysis Test Provides a complete audit and inventory of your deposit, including analysis of deposited media to verify the presence of build instructions and identification of materials necessary to recreate the original development environment. Level 2 - Compile Test Validates whether the development environment can be recreated from the documentation and files supplied in the escrow deposit. Level 3 - Binary Comparison Test Tests the functionality of the compiled deposit materials by comparing the files built in compile testing to the licensed, executable file running at your site. Level 4 - Full Usability Test Confirms that the source code placed in escrow will be fully functional in the event of a release. We run a series of tests to ensure that replicated software runs properly, and then create a detailed report of these tests, which includes demonstrations of the functioning software in action. Iron Mountain s Verification Service Levels Level 4 Full Usability Test Level 3 Binary Comparison Test Does the software work properly? Verify and confirm that the built application works properly when installed Level 2 Compile Test Do the files match? Verify that the compiled files on deposit compare identically to the technology licensed Level 1 Inventory & Analysis Test Do the deposited materials compile? Verify the ability to compile the deposit materials and build executable code Can the environment be recreated? Verify that information required to recreate the depositor s development environment has been stored in escrow /
5 Q. How do I know which verification level I need? A. Iron Mountain s dedicated staff of verification experts will consult with you to determine which verification level best suits your requirements. The recommended type of testing largely depends on the criticality of your licensed technology and the business risks of your developer. For mission-critical software, Iron Mountain recommends seeking the most thorough verification testing for optimal protection against incomplete or inoperable technology escrow deposits. Software Development and Licensing FAQ Q. What is source code? A. Source code is the written version of a software application that is readable by programmers. It is like a secret recipe and is often deemed a trade secret. That s why software development companies do their best to protect their source code it is their most valuable piece of intellectual property. Licensed software cannot be repaired or upgraded without the source code. Q. What is object code? A. Object code is the translation of source code into a language that only computers can read. It consists of a series of ones and zeros. Object code is generally created by taking proprietary source code and running it through a software program that transforms the source code into object code. Object code is then bound into executable code / 5
6 Intellectual Property Management Q. Why is it necessary to know what third-party software is required to support the deposited code? A. Third-party applications are utilised in nearly every software development environment and are needed to recreate the depositor s executable code. A beneficiary that does not know what additional third-party software is needed to run in conjunction with the source code will have an extremely difficult time learning this on its own. Iron Mountain s verification process helps to identify third-party applications that are required to build executable code. Q. What is executable code? A. Near the end of the software development process, object code is linked or bound together with other object code (which may be created by third parties) to create executable code. Typically, executable code is licensed to beneficiaries and installed in a live operating environment. Software developers feel confident in licensing executable code because it is extremely difficult to reverse the process and discover the nature of the source code by examining the object code. Q. How do typical software licensing arrangements creat risk for licensees? A. Most software licences involve the licensing of executable code and not source code, which is needed to modify the technology. Because of this, the software user (licensee) is only able to correct bugs in the software, upgrade the product, and maintain the software through the software developer (licensor) the only one who has access to the source code. This puts most software licensees in an extremely vulnerable position, especially if the software vendor goes out of business, is bought by a competitor, files for bankruptcy, or discontinues providing maintenance support for any reason. The most widely used solution to this problem is to establish a technology escrow account that contains a copy of the source code and maintenance materials needed to compile and support the program. Q. What unique risks do Software As A Service (SaaS) Application Providers create? A. Since SaaS applications are running in the cloud, and not on-premises in the beneficiary s environment, the operating environment is often unfamiliar. Therefore, for SaaS environments, information about the Application Service Providers (ASPs) operating environment should be included in the escrow deposit. In addition, your company s user data also must be placed in escrow (since this also lives in the cloud) or other arrangements need to be made ensure access to the data. If these additional steps are not taken, the escrow deposit will not be useful to you upon release. Iron Mountain offers specific SaaS escrow services designed at mitigating risks of doing business with SaaS companies by addressing application continuity, service sustainability and unfettered access to data. Q. What is included in a standard Iron Mountain inspection of deposit materials? A. Iron Mountain opens every sealed escrow deposit and visually checks the deposit materials against the documentation provided by the developer (depositor). This ensures that the description of materials matches the deposit (Exhibit B). For example, if the Exhibit B states that the deposit should include three CDs and that those CDs are labeled A, B and C, then Iron Mountain will count the number of CDs in the deposit and check that they are labeled correctly. Once the visual inspection is completed, notifications are sent to the parties according to the contract terms. Of course, this is only a visual inspection, and we recommend adding additional verification services for optimal protection /
7 Q. Verification next steps A. By establishing an escrow arrangement with Iron Mountain, you have recognised that your licensed missioncritical technology is an important aspect of your organisation s business operations. Complementing your escrow arrangement with verification services will help to mitigate potential risks by providing complete intellectual property protection and management, and ensuring a more rapid recovery for your organisation should circumstances require it. To find out more information or to request verification services for deposited escrow materials, contact your local Iron Mountain sales representative or call us on Note: Statistics in this document are being reviewed constantly and may change; these are accurate as of time of publication / 7
8 Intellectual Property Management About Iron Mountain. Iron Mountain Incorporated (NYSE: IRM) provides information management services that help organisations lower the costs, risks and inefficiencies of managing their physical and digital data. Founded in 1951, Iron Mountain manages billions of information assets, including backup and archival data, electronic records, document imaging, business records, secure shredding, and more, for organisations around the world. Visit the company Web site at for more information Iron Mountain Incorporated. All rights reserved. Iron Mountain and the design of the mountain are registered trademarks of Iron Mountain Incorporated in the U.S. and other countries. All other trademarks are the property of their respective owners /
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