Source Code Escrow

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Computer and Software Terms

Source code - is a set of computer program instructions in their original form. A software developer writes a program using a high-level programming language, or source program, such as FORTRAN or C. Source code is the only programming format that is readable by humans--at least those that are experienced computer programmers.

Compile -to translate the high-level programming language, or source code, into an intermediary form called object code. This is done by a compiler, which is a program that translates the code. Rather than executing a program line by line, a compiler looks at the entire source code. Different compilers work with different source codes, and compilers vary according to the type of computer used as well. That's why there are different versions of the same software, one for Macs and another for PCs for example.

Object code - is the source code translated into machine language. In some cases the object code must be translated again to produce low-level machine code and, in others, the object code is the actual machine language. Purchased software traditionally contains only the machine language, which cannot be read or altered by the user.

Machine code - is the set of computer instructions the computer reads to run, or execute, a program. The instructions are actually just a series of symbols or numbers that only the computer can understand. Each type of computer has its own unique machine language.

Legal Terms

Escrow - a system of document transfer in which a deed, bond, money, stock or other property is delivered to a third party to hold until certain conditions in a contract are fulfilled.

Escrow agent - The party who receives property to hold in safe-keeping and to deliver it to the escrow beneficiary according to the terms of the contract.

Deposit - In general, an act by which a person (escrow agent) receives the property of another (the software developer), binding himself to preserve it and return it in kind.

License - A document which grants permission to use a person's physical or intellectual property. A software license agreement specifies the permissible uses of the program. It does not transfer ownership.

Licensor - The person who gives or grants a license. (The software developer.)

Licensee - Person to whom a license has been granted. (The software user.)

Beneficiary - A party who will benefit from a transfer of property or other arrangement. (The software user.)

Date or Time stamping - Official record of the date on which the initial escrow deposit and subsequent additions and upgrades were made. These records can be used as valuable evidence to prove who created the software first, which is necessary information for copyright protection, or to show due diligence for ownership, patent and trade secret protection under the law.

Copyright - The right of literary property as recognized and sanctioned by positive law. An intangible, incorporeal right granted by statute to the author or originator of certain literary or artistic productions, whereby he is invested, for a specified period, with the sole and exclusive privilege of multiplying copies of the same and publishing and selling them.

Ownership - Collection of rights to use and enjoy property, including right to transmit it to others. The complete dominion, title or proprietary right in a thing or claim.

Trade secret - A trade secret, as protected from misappropriation, may consist of any formula, pattern, or device of compilation of information which is used in one's business, and which gives a person an opportunity to obtain an advantage over competitors who do not know or use it. A secret formula or process not patented, but known only to certain individuals using it in compounding some article of trade having commercial value.

Diligence - Vigilant activity, persistent in doing a thing, attentiveness or care, of which there are infinite shades, from the slightest momentary thought to vigilant anxiety. The opposite of negligence.

Due diligence - Such a measure of prudence, or activity, as is properly to be expected from, and ordinarily exercised by, a reasonable and prudent person under the particular circumstances; not measured by any absolute standard, but depending on the relative facts of the special case.

Collateral - Property which is pledged as security for the satisfaction of a debt. Collateral is additional security for performance of principal obligation, or that which is by the side, and not in direct line.

Documentation - The deeds, agreements, title-papers, letters, receipts or other written instruments used to prove a fact, such as authorship. Any physical embodiment of information or ideas, which may be used as best evidence.

Leverage -The use of a small investment to generate a larger rate of return through borrowing.


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