What It’s Like To…Take Your Application Source Code Out of Escrow

As a leading entertainment retailer with more than 800 stores, we’re always looking for a competitive edge. And in the fall of 2000, we found one. Working with an outside software developer, we created our own “Listening-Viewing” system that lets customers see and hear clips from products in our stores just by scanning their bar codes.

Like many companies, we arranged to have the source code from the project put in escrow (in this case, with Iron Mountain) as a hedge against our vendor going out of business or failing to support a product we relied on. But our reason for pulling the code out of escrow was rather unique: We removed it not because we needed it, but because we acquired it; once you own the code, you don’t need escrow anymore.

What happened was that our vendor was trying to market the system to our competitors. After the ensuing lawsuit (in which TWE prevailed), we took over the software company and the source code.

If you look at our investment in the system, the cost of putting the code in escrow was insignificant. I would definitely do it again.

—As told to Christopher Lindquist