Total Escrow Solutions

The right to delivery up of intellectual property rights

David Clee — Fri, 13 Mar 2015 09:19:05 +0000

Original news

FilmFlex Movies Ltd v Piksel Ltd [2015] EWHC 426 (Ch), [2015] All ER (D) 281 (Feb)

The claimant company provided video-on-demand movie streaming services. The defendant company was a video broadband software designer and developer and a managed services provider. The claimant applied for an order for the delivery up of source code and related documentation, which was held by an escrow agent. The Chancery Division, in determining a preliminary issue, held that, on the true construction of the contractual arrangements and on the facts, the claimant was entitled to delivery up of the source code by the defendant and entitled to require the defendant to procure the delivery up of the source code by escrow agents, which held the code.

What key issues did this case raise?

The claimant, FilmFlex, is a provider of video-on-demand streaming services, provided through an online content delivery platform which was designed, built and maintained for it by the defendant, Piksel, a company providing video broadband development services.

The dispute concerned the proper construction of two related agreements between the parties: a Master Services Agreement (MSA) entered into in June 2012, and a subsequent Escrow Agreement made between FilmFlex, Piksel and a third party Escrow Agent, concluded in November 2012.

Considerable work was done to the platform by Piksel, for which Piksel was paid fees totalling over £7m. In 2014, FilmFlex sought to part company with Piksel and appoint a new developer in its place, as it had the express right to do under the terms of the MSA.

The difficulty FilmFlex faced was that it did not hold a copy of the source code to the platform (or at least, not in any functionally useful format). The parties fell into disagreement over FilmFlex’s entitlement to receive such a copy, and proceedings ensued.

FilmFlex applied for an order for the delivery up of source code by Piksel, and an order compelling Piksel to instruct the escrow agent to release a copy of the same. FilmFlex advanced three alternative contractual arguments in its pursuit of the source code:

that it had a right to the release of the source code in escrow (and to require Piksel to join in an instruction to the Escrow Agreement to this effect) because a trigger event specified in the MSA had occurred, namely the appointment by FilmFlex of a third party to provide the services that Piksel had been providing
that it had a direct right as against Piksel to access the source code under what it characterised as a catch-all term which stated (rather promisingly) that Piksel ‘acknowledges and agrees that [FilmFlex] will have access to the source code (and [Piksel] shall reasonably co-operate in the provision of such access) throughout the term of this Agreement upon the [FilmFlex's] request’
that it had an entitlement to a copy of the source code by virtue of a combination of ownership (of one part) and a comprehensive licence (over the other part) of the intellectual property rights in the platform

Piksel argued that the only circumstances in which the source code would be delivered up to FilmFlex were the release events set out in the Escrow Agreement, and none of the circumstances described there had arisen.

What did the court decide and does the judgment help clarify the law in this area?

The court found in favour of FilmFlex on all three of its arguments and held that, on a true construction of the contractual arrangements and on the evidence, FilmFlex was entitled to delivery up of the source code directly from Piksel. It was further entitled to require Piksel to join with FilmFlex in instructing the delivery up of the source code by the Escrow Agent.

On the first issue, the key point for the court to decide was how the (longer) list of circumstances in which the source code would be released appearing in the MSA should be reconciled with the (shorter) list of such trigger events set out in the later Escrow Agreement.

The judge gave short shrift to Piksel’s argument that the comprehensive terms of the MSA had been superseded by the conclusion of the Escrow Agreement. She was especially persuaded by the fact that the terms of the Escrow Agreement were based on the escrow agent’s standard printed terms and conditions, which were already held by the parties whilst they were negotiating the MSA.

Although there were some discussions about changes to the standard terms after the execution of the MSA, these did not include the release events for the source code. The judge concluded that there was nothing in the evidence to indicate to an objective observer that the parties intended, when the Escrow Agreement was signed, that the only circumstances in which FilmFlex could obtain the release of the material from the escrow account were those included in the escrow agent’s standard terms. The mere fact that the Escrow Agreement came after the MSA was signed did not, in the judge’s view, mean that its terms ousted the terms of the MSA.

Piksel fared no better with its attempts to re-characterise the catch-all provision for FilmFlex to request the source code. Its argument that, by virtue of its location in the MSA, the catch-all clause should be treated as just another release event (which was then superseded by the terms of the Escrow Agreement) failed for the reasons above.

More interestingly, Piksel took the point that the clause only referred to FilmFlex having ‘access’ to the source code, not to have delivery up of a copy of it, and that the most that they were obliged to allow FilmFlex to do under that clause was look at the source code on Piksel’s servers. In answer to this, the judge held that a right of ‘access’ to something must depend on the nature of the thing and the purpose for which that access is given. If a contract gives one party access to certain material, and (as here) the scope of that material is defined as including everything necessary to carry out certain activities, then it makes sense to construe the access granted as including whatever access is needed in order to carry on those activities. Accordingly, if FilmFlex wanted to use, reproduce, modify or enhance the software, they must not only be able to look at the source code (which was said to comprise about three million lines of code) but also have a copy of it that they could use.

In deciding the third argument, the judge had to consider the effect of the split ownership of the intellectual property rights in the source code. The platform as it stood before 24 June 2011 belonged to Piksel and was licensed in very wide terms to FilmFlex, whereas the source code created after that date belonged to FilmFlex and was licensed in much narrower terms to Piksel. Did that combination of ownership and licence entitle FilmFlex to a copy of the source code for the whole platform?

The judge held that it did. The licence allowed FilmFlex to carry out various activities in relation to the licensed intellectual property rights which could only sensibly be carried out if FilmFlex had a copy of the source code to use itself. Hand in hand with that licence was an entitlement for FilmFlex to receive ‘physical Page 3 delivery up’ of the source code. The judge was not persuaded by Piksel’s argument that such a measure would be tantamount to ownership–the source code would not be surrendered by Piksel once it provided a copy to FilmFlex, as it would remain intact on Piksel’s system. Importantly, although it is possible to have many copies of source code held by different people, FilmFlex did not have a copy even though it owned the intellectual property rights in part of the platform, and had an extensive licence to use other parts. In short, if FilmFlex is entitled under its rights of ownership under cl 9.2 or its licence under cl 9.1 to make a copy of the source code but the only copy which currently exists is with the other party to the contract, then the other party must give FilmFlex a copy so that FilmFlex can itself make a copy of it.

Are there any common issues that should be clearly addressed in licensing agreements?

This case is a useful reminder of the need to ensure that all those involved in the negotiation and drafting of such agreements are fully familiar with the technical terms in play, and in particular that defined technical terms are properly integrated with the other operative provisions of the agreement. The case also underlines the importance of ensuring that two agreements covering some of the same points sit coherently next to each other and do not contain inconsistences that leave scope for argument.

What should lawyers advising in this area of law take note of?

This decision was primarily a fact-specific analysis of two bespoke agreements. The most interesting legal point emerging from it is the judge’s analysis on the circumstances in which comprehensive intellectual property rights enjoyed over a certain work–particularly if that work is incorporeal–can be tantamount to a right to delivery up of it and look virtually indistinguishable from absolute ownership. Any lawyers tasked with documenting rights and obligations in respect of a work whose ownership is split will need to advise carefully on the practical implications of this and draft accordingly.

Phil Smith is a partner in the dispute resolution and insolvency teams at Pitmans LLP. He specialises in commercial litigation, bringing and defending a wide range contractual and tortious claims on behalf of businesses, individuals and insolvency practitioners. He has particular expertise in technology disputes, property litigation, costs and contentious insolvency matters.

How would your business recover from technology meltdown?

David Clee — Thu, 22 Jan 2015 17:39:07 +0000

One of the biggest fears of any IT manager is total tech meltdown; even partial failure is likely to have a massive impact on business. So why do so many businesses still struggle to recover when technology fails – 78% of businesses that suffer significant data loss are out of business within 6 months. Most businesses fail to recover adequately and place enormous burden their business continuity and position in the market.

“By failing to prepare, you are preparing to fail.” ? Benjamin Franklin

When it comes to technology failure, slight inconvenience until things get up and running again is likely to be the least of your problems. Data loss can have legal implications that have the potential to cost your business or even have limits placed on your trading, is likely to lead to a loss of customer confidence and long-term reputational damage. Even for small businesses, it simply isn’t worth the risk of letting a technology failure have such a catastrophic effect.

“It won’t happen to us” – IT Managers

With all the will in the world, IT failure can happen to any company, there are just too many variables that are prone to effect networked IT services: human errors, hardware failure, software failure, viruses, malicious attacks, system bugs or even natural disasters that you really would struggle to plan for. While there is no ‘good time’ for IT meltdown to hit, it generally hits at a very inconvenient time; IT systems are generally not tested for load capacity so when systems are at peak use is when they are most vulnerable.

But really, what causes the technology meltdown and data loss is insignificant compared to the recovery. Most businesses at first glance have fairly good backup procedures but on deeper inspection fall short of what would be required in order to recover from a major tech failure. Many businesses rely on individuals within their organisation to perform daily manual backups of their own files or weekly system backups, and to keep their data password protected and encrypted.

But how realistic is it really to rely on individuals to ensure the on-going data security of your entire IT infrastructure? In actuality setting up an effective IT backup and recovery system is a lot simpler than it sounds, once set up a proper back up system should operate seamlessly, it will even reduce the burden on individuals to backup manually.

How a proper backup and recovery system should look:

Data backup should be automatic and on-going
Backup data should be stored off-site at a dedicated data centre
Backup data should be instantly accessible by those with the correct authorisation
Local, transfer and backup data should be automatically encrypted
Backup system should be thoroughly reviewed every month

It’s important for a business of any size to consider effective data backup and recovery in case of a tech meltdown, the hardest part is getting the systems in place, which is a lot easier than trying to recover from failure if proper backup systems are not in place. Once set up and running smoothly you will wonder why you put it off for so long!

Can You Make Money By Developing Free Software?

David Clee — Fri, 12 Dec 2014 12:16:02 +0000

Free software has recently peaked in popularity, taking on several different guises, from free apps and community led open source software to large well resourced software companies opening up software to the general public for use and development. The free software community has been recognised as a significant movement and a big part of the software industry. But can individual software developers or software companies make money from free software?

At first glance it might seem pretty bad business to give your software away for free but some companies have been doing it for years, so there must be something in it, right? As recently demonstrated by 3d printer manufacturers ‘Makerbot’ open source software provided a great way for them to quickly advance and improve the software that their 3d printers were using.

Professional bespoke software packages can be extremely expensive to initially purchase and may require recurring payments for continued upgrades and support. So instead of this some large organisations instead source a free, open source version of software that will serve the same purpose and then hire software developers to work on the software for them. This has several advantages for the organization – they are saving money and will have software that is more tailored and more frequently updated to suit their needs.

Working in this way organisations have even been known to then go on to license the software they have created and make it available for sale. So while this is profitable for the organisations it is obviously also profitable for the individuals software developers who have paid employment working on essentially free software.

Many software developers wishing to work on free software in a paid capacity also have an opportunity not available in most lines or work. Due to the open access public development of the software, developers have the opportunity to work on the software as they please fixing bugs, creating plugins or general advancement of the software, while this gives them great experience the main development teams from the software organisations often take on developers who have shown promise – This is exactly how Makerbot recruited many of their initial software development team. Wannabe software developers can effectively create a job for themselves if they prove their worth.

One of the bonuses of developing free software, especially with open source is the level of community interest that it is possible to grow, this interest can turn into a massive following that if managed correctly can turn into an extremely large and profitable customer base.

Other software that falls into the realms of free software is free apps. Free apps that become popular have the ability to make the app developers a huge return; this return may be seen through advertising or in game purchases. For example video game company Supercell develop 3 free to download and free to play games popularly known as freemium games, these games offer in app purchases that in 2013 saw Supercell generate a revenue of $2.4 million per day. Obviously developing a freemium app or game can be a huge gamble as if it doesn’t become popular the costs of development are likely to leave a significant financial dent.

The risk technology poses to businesses that rely on technology

David Clee — Mon, 24 Nov 2014 15:18:08 +0000

It’s essentially a double-edged sword. Technology is imperative for a large majority of businesses. In fact, one could justifiably argue that a business without any form of technology would struggle to sustain itself long-term. However, at any time, without warning, technology can turn from a necessity into a nightmare.

The technology industry is moving at one hundred miles a minute. While this is great for business development if a company has the finances in place to stay up to date it can play havoc with others.

The reality is that technology can cause a number of issues and here we will explore them in further detail.

Computers can be hacked
Any computer using a network to access the Internet, secure or not, has the capacity to be hacked. Sure, there are steps you can take to limit the risk, but the reality is that every system is venerable.

Being hacked could cause no problems at all; amazingly, some hackers still do it for the thrill even though they could face jail if caught. However, if your system is hacked it is more than likely that data has been wiped, information has been stolen or the system has been used to carry out criminal activity.

Computers can also be infected with Malware, which could stop your computer from working or be subject to a virus, which can affect a whole network easily.

All of these points above are likely to cause substantial disruption to any business. As well as the time that a company would lose by trying to limit the damage, a business could lose client information or even worse, financial information. In the event of a breach of this kind, if the right steps are not taken a company would more than likely have to liquidate because of the resulting issues.

When technology didn’t exist, the only way one could obtain information from a business would have been to obtain it by breaking into an office, but this is no longer the case.

Computers can stop working for seemingly no reason at all
One day your computer might be working fine, the next it does not turn on. Unfortunately, every business may come across this problem. If a motherboard on a computer fails, the likelihood is that the system will be non-operational, and all the data on the device will be wiped.

Worst-case scenario is that your information on your computer is not backed up, and you lose everything. Everybody tells those in business to back up their information, but that does not mean that they do it regularly or even at all. Best-case scenario – the motherboard needs to be replaced, and if you require a professional to do it then you’re looking at a bill of at least £150. In the majority of cases, when a motherboard fails, the user will just end up buying a new computer.

There is no denying that technology has made running a business much easier, but unfortunately, it’s not without its risks. Make sure you take the time to ensure your system is secure, and that you take precautions to limit the damage caused if the worst should happen.

New rechargeable solar battery has the potential to revolutionise the solar market

David Clee — Mon, 06 Oct 2014 08:30:59 +0000

A group of Ohio State University scientists led by Professor Yiying Wu could have just re-revolutionised the solar market with a new development on existing technology.
The new development is actually a redevelopment of the existing solar cell. Wu and his team have managed to ‘double up’ the cell with a working rechargeable battery. This allows users to take full advantage of the benefits of both markets.

Solar powered batteries have long been one of the most talked about technological developments, but this solar panel battery has the capacity to be even more effective than anything currently in development.
How does the process work?

Essentially, Wu and his team have managed to create a ‘breathing battery’. The combination of the solar panel battery with titanium mesh gauze, titanium dioxide, permeable carbon and a lithium plate form the intricate technology behind the device.

Now, solar panels, while an astonishing development, have a number of rather significant flaws. One of these ‘blemishes’ is the loss of over 20% of the energy during transfer from the cell to storage.
Wu has predicted that his new device has the potential to make what is currently available 100% more efficient, which would lower solar costs by over 25%. This development, if there are no issues, would revitalise the industry and green technology.

Revitalising an industry with unlimited potential

When the idea of solar power first came to prominence, everybody involved in the development thought that it would be the divine answer to green issues. However, even though early developments made substantial process in the renewable-energy market, development had somewhat come to a proverbial standstill, but this development could really change that.

According to a recent report, the two factors that currently stop people from buying solar technology over other alternatives are the price of installation and equipment and the ineffectiveness of the device both in the sun and at night. As mentioned previously, this development has the potential to both lower costs and increase efficiency substantially, which will revitalise the market.

While the technology looks like it is ready, the reality is that the process is still very much in the early stages. Wu and his team have recently filed for a patent and are currently in the process of getting the product licensed so that they can sell and distribute it all around the world.

Total Escrow Solutions PLC Opens New Branch In UAE

David Clee — Fri, 19 Sep 2014 10:41:45 +0000

A leading software escrow solutions agent is spreading its wings to international territory, recently throwing open its doors at a brand new branch in the global business hub of Dubai. The Dubai Airport branch joins Total Escrow Solutions PLC’s existing UK offices in London and Manchester. With an increasing number of multinational companies basing themselves in the UAE, Total Escrow Solutions PLC will be perfectly positioned to offer software vendor and developers a level of service that is both local and personalised.

The company is already providing software escrow solutions and verification services to major GCC infrastructure projects as well as confirming existing contracts with SRO and the KSA Ministry of Finance and Transportation.

David Clee, Managing Director says “For years, Dubai has continued to cement its status a global business centre attracting big name firms and multinational corporations. As a company committed to staying at the forefront of the industry, expanding to Dubai was the next logical step for Total Escrow Solutions PLC. From our new branch, we’ll be equipped with the infrastructure and locality to offer our clients a sublime level of expertise and customer care.”
The move comes ahead of the company’s plans to showcase at a major technology exhibition to be held in the UAE’s most populous emirate. Scheduled for October 12 – 16, GITEX Technology Week 2014 will be held at the prestigious Dubai World Trade Centre. Total Escrow Solutions PLC will join hundreds of other exhibitors including prominent global names such as Cisco, Samsung, Sony, Citrix and Symantec.

With over 20 years of industry experience in the industry, Total Escrow Solutions PLC provides premium software escrow solutions and IP services to organisations operating in all market sectors. The company prides itself on the ability to deliver bespoke legal agreements that are tailor made to fit the unique needs of every client. A specialist team of consultants bring a wealth of complex software escrow solutions to the table while the company also boasts ISO 9001 certification.
Over the past decade, the company has built itself an impressive portfolio of clients operating in a wide range of industry sectors, public sector organisations and government departments across the globe. With blue chip names such as Atos, NHS, Philips, Aon, IGI, SITA, Rentokil, Pirtek, ASDA and Aggreko on the books, Total Escrow Solutions PLC offers an unmatched level of expertise.

The new Total Escrow Solutions PLC office is located in the Dubai Airport Free Zone, East Wing 3, 4th Floor, East Wing 3, 4th Floor, P.O.Box 54620, Dubai, United Arab Emirates.

4 Common Questions Businesses Ask About Software Escrow

David Clee — Wed, 27 Aug 2014 08:23:35 +0000

If your business uses tailor made software to run some of its processes, then you will have heard about software escrow agreements at some point. If you are concerned about business continuity and how best to manage your disaster recovery strategy, then entering into an agreement that protects your software provision is vital. And it’s a good idea to get it done before things go wrong.

Do I need software escrow?
The simple answer is yes. If you have software that is vital for the functioning of your company then it pays to have that insurance. Your licensor or vendor may well go out of business and having the full software held with a neutral third party can save a lot of time and expense in switching to a new software system.

Doesn’t the cloud change the need for a software escrow?
No. The cloud is just a more convenient way to transfer digital products and makes it easier to get hold of software when you need it most. In effect, it doesn’t make any difference if the vendor is running software in the cloud, in house or anywhere else for that matter. If your licensor suddenly crashes and goes out of business you will still want and need your systems maintaining and updating.

How likely is it that my vendor will go out of business?
That’s the $64,000 question. Whilst we are coming out of the financial recession, companies are still struggling and that includes software providers. There is no guarantee that everything will go smoothly and having something like a software escrow in place is just another sensible level of protection.

There are a number of things that can happen to any company including:
• Going out of business.
• A breakdown in the supply chain.
• A natural disaster that effects the running of the business.
• Threats to the integrity of the software from hackers.
• A change in company policy that means your software is suddenly not going to be maintained.

My supplier doesn’t run a software escrow, what should I do?
Any reputable software company will utilise a software escrow. Not only does it protect their customers in the advent that something goes wrong but it protects their own business too. If your supplier doesn’t run an escrow plan then it might be time to think about going elsewhere. A software verification process with a suitable escrow ensures that all the building blocks for the software are present and correct, which means that, should your vendor go out of business, everything your company needs is available.

If you have a critical application, particularly one that has been tailored to your specific needs, then a software escrow is the simple solution to make sure that you have everything in place should you need to instigate a disaster recovery protocol or maintain business continuity in the event that your provider goes out of business.

5 Things to Look for in a Software Escrow Provider

David Clee — Fri, 22 Aug 2014 08:23:30 +0000

Maintaining business continuity in the event of some disaster lies at the heart of any software development company. Whilst we all work to keep our part of the internet world safe, with the prevalence of greater technological developments it is now, more than ever, vital to protect what you have.
Most software providers don’t just offer a one off installation, there are updates and tweaks to the system that need to be conveyed to the licensee. And often there is a need to adjust the software you provide to the particular needs of a specific business.

Finding the right software escrow provider is important if you want to maintain the integrity of your software and ensure that all your customers are covered if something goes wrong. A good service can help eliminate any supply chain risk and ensure that, as the vendor, all your own provision is safe guarded.

• Choose a neutral provider. If you are a software company then you want to select an escrow provider that has no vested interest in your product and is geared to providing the full range of services your product and customers need.
• Is your escrow provider clear about the chain of custody? In other words, all process should be recorded and documented appropriately. That includes hard copies of your software as well as electronic transfers.
• Is it secure? Of course you want your software to be held in a safe place, so it’s a good idea to check out what security measures the company has in place and what safety measures it utilises in the event of a breach to maintain business continuity. What disaster recover measures do they have in place? Can they put in place the right verification procedures?
• Does it offer the right reporting? If you need to provide updated reports for audit purposes then you need a service that offers the right reporting measures.
• How do you interact with the company? A web based system that lets you track information is a more flexible way to work with all your escrow needs. Can you contact their customer service section easily and get the advice you need? Are they on hand in an emergency?
• What is the verification process? Ensure that the provider has a robust verification process so that the software is accessible and available if the customer needs it.
• Trust is a big thing in software escrow circles. Choose a company that has a good track record and you can build a relationship that is built on trust. Who do they currently provide for?

Can you contact them to ask if they are getting a good service?

The most important advice for choosing the right partner to manage your software escrow needs is to take your time and check out all the competition. Build a list of all your requirements and match them to your provider. You may have spent 100s of man hours developing your software, so doesn’t it pay to take some time in choosing a suitable escrow partner?

Software Escrow and Your Business

David Clee — Mon, 11 Aug 2014 08:16:09 +0000

A large number of businesses now rely on being connected to the internet, whether it’s having a website up and running, or using innovations like the cloud to communicate with each other. Many also use complex software, from a variety of sources, without really considering what happens when their vendor suffers downtime or a significant issue that requires disaster recovery.
Business continuity is one of the big issues we face today and a service like software escrow could help provide a safety net in the event that something goes wrong.

What is software escrow?

If you run specific software on your website or for your business, the vendor will normally give you access to it to use, but not access to the specific source code. This is fine as long as everything works well, but what happens to the licensee if the licensor either goes out of business or suffers a catastrophic failure? A software escrow is a way of lodging the source code with a neutral third party who can act if there is a problem.

While it is less likely to happen with bigger company software such as that provided by Microsoft, there are still many smaller software suppliers out there, and most businesses have one brand of software attached to their daily functioning that is mission critical.

Software or source code escrows should generally negotiated when you start your first contract with a software company but many businesses are not aware that this vital safety net is even there.

Reasons you need software escrow.

Maintaining business continuity is vital to all companies operating in the online world. Most now utilise disaster recovery measures such as mirror sites that maintain their web presence even when the main server goes down. There are a number of situations when having a software escrow in place for vital programs can be useful:

• The company that provides the software gets into to trouble, laying off staff and reducing its support provisions.
• The software company suffers from its own disaster situation, either an outage or an attack from hackers that makes your system vulnerable and prevents you getting valuable updates.
• The software provider changes the terms of your agreement and fails to provide the service or maintenance that is needed.
• There is a change of provider or the software is discontinued.

When you undertake a software escrow agreement, you need to be sure that it covers all possible eventualities and provides adequate protection in the event of various kinds of failure. But it’s not just those individual businesses that use a particular software that can benefit from this simple protections.

The benefits of a software escrow for the licensee.

Providing a safety net for your potential customers sends out the message that you are a software company that can be trusted. Many businesses are reticent about dealing with small or new software companies simply because of the things that could go wrong in the future. Utilising a third party that can protect your software and make it available if there is a disaster, or you are unable to perform your duties as a vendor, makes sense and helps keep everyone safe.

Escrow for Cloud and SaaS Services

David Clee — Thu, 19 Jun 2014 09:51:55 +0000

Last year, I blogged about the fallout from data centre provider 2e2 going into administration. The incident highlighted some of the key risks that can arise out of the use of third party cloud/hosted services, such as infrastructure as a service (SaaS) or software as a service (SaaS).

In short, 2e2?s financial position was so poor that the administrators were unable to keep the business going long enough for customers to access their data (and transition to alternative providers) unless the customers provided sufficient funding. For the 9 day period of service proposed by the administrators, this amounted to a shortfall of just under £1m. The majority of this funding was demanded from the company’s 20 largest customers, with all others receiving a demand for a further £4,000 plus VAT.

If the funding was not provided, the administrators stated that they would need to

cease all Data Centre operations with immediate effect without any managed wind-down of those operations.

Frightening stuff for those relying on infrastructure in 2e2?s data centres to run their business.

cloud services and risk mitigation

In my blog, I suggested a number of steps that users of cloud services could take to ensure that they reduce the risk of this happening to them.

These suggestions include ensuring that organisations
•carry out appropriate supplier diligence;
•monitor the financial position of their key suppliers; and
•take proactive steps to ensure that business interruption through loss of a key system or data is minimised

This last step involves reviewing the business continuity arrangements of both your own organisation and your suppliers, and considering what additional steps can be taken to mitigate the risks.

Source code escrow doesn’t help

As I noted in the blog, traditional software escrow is pretty pointless for cloud as it is simply designed to give licensees access to the underlying source code in order for the customer to maintain software that it has already installed on its own systems.

With cloud/SaaS services, the customer never gets access to the software, never mind the source code. What the customer wants is to be able to quickly (ideally within hours) spin up a new server, on alternative infrastructure, hosting the SAAS application, complete with all the customer’s data. Ongoing maintenance of the underlying code is likely to be the last thing on their mind at that point.

One option is to ask the supplier of your cloud service to provide you with a regular (daily/weekly/real-time synched) copy of a virtualised sever containing the SAAS application and your data. But some cloud vendors are reluctant to do this.

A new type of escrow for cloud?

The good news is that escrow providers are now waking up to customer demand and offering cloud focussed escrow solutions.

For example, the TES now offers a SaaS Assured service. As TES says:

SaaS Assured helps to ‘keep the lights on’ while allowing time for end users to source and transition to an alternative solution that fits their requirements

This won’t be a long term solution to any sudden supplier failure, but may just help a business to get through without being held to ransom by the administrators. For any business that is using the cloud for critical business functions/records storage, that is likely to be an insurance policy worth considering as part of its overall approach to business continuity.