This is the first of an occasional series on US law and intellectual property (IP) as it affects software and systems used in health technology. This article discusses the software developer’s rights to source code, licensing by the end user and the best ways both parties can protect themselves long-term in their transactions via software escrow.
Mark Grossman, JD, has nearly 30 years of experience in business law and began focusing his practice on technology over 20 years ago. He is an attorney with Tannenbaum Helpern Syracuse & Hirschtritt in New York City and has for ten years been listed in Best Lawyers in America. Mr. Grossman has been Special Counsel for the X-Prize Foundation and SME (subject matter expert) for Florida’s Internet Task Force. More information on Mr. Grossman here.
Source Code Escrow
It’s a nightmarish scenario. Let’s say that you’re the head of Information Technology (IT) for a hospital or a group of long-term care facilities. You pay a software development company $500,000 to create new software for your telehealth monitoring and alert system. It doesn’t matter whether the software runs locally on your servers, or in the cloud in a SaaS model. But then your developer goes bankrupt or for whatever reason and refuses to support the software. If you didn’t consider access to the source code in your agreement with the developer, you may find that you’re unemployed.
Essentially, “source code” is computer programming that humans can read. “Object code” is programming that only your computer can read. Typically, as a user, you only have access to the object code.
Software developers consider the source code to be their most valuable trade secret. With the source code, a competitor could create a competing work without incurring all of the development costs of the original developer. Source code is the lifeblood of the software development business.
From your perspective as the head of IT for that hospital or facility, you need the source code to continue the evolutionary development of your software or to fix bugs if your original developer disappears on you. If they can’t or won’t help, you’ll need to (more…)



Shortly after arriving at Stanford University School of Medicine to attend the conference called 



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