V3Data was a consortium of subject matter experts specializing in trusted software business services such as software escrow, software escrow consulting, software escrow valuation, software patent portfolio management and software escrow evaluation (verification, valuation, and validation) founded by Dwight Olson. See his Bio Dwight C. Olson, vice chairman, chief technology officer, and co-founder of Data Securities
On software escrow and evaluation
According to the experts in the field of intellectual property valuations, there are four main value concepts used while valuing any IP and they are appropriate for software; ownership value, market value, fair value, and tax value. Ownership value is the view of value if the owner, investor, or exclusive licensee is deprived of the ability to commercialize and/or exclusively use.
See Wiki - Data Securities International (DSI) introduced a software valuation concept called Software Ownership Value [TSV (OV)] in the mid 1980’s when it was the world’s leader in providing software escrow services to better determine the ownership value and risk factors in software and software escrow. An introduction to software constructs and risk factors are addressed in many of the articles available on this website. DSI was founded by Dwight C. Olson see Dwight_C._Olson also at Wiki.
Risks, sometimes called “software intellectual property investment risk”, proved a deterrent to the adoption of innovative software from smaller vendors in the early formation years of software as an industry. In the early eighties, there were only small software companies. DSI wanted to find a way to control this software investment risk. If one construct of software, source code, could be stored in a safe place — a place where only a neutral third party could access it, and the developer still in control of it, then users could obtain it in the event that the owner-originator went bankrupt. But, much has happened in the industry since then, it has gone global. Some thoughts follow for the reader:
Software IP Valuation
Software is a complex bundle of assets and consists of both intellectual property and intellectual asset components. There are numerous reasons to conduct a valuation of a software based technology intangible and in using Total Software Value (TSV) there are three primary but different value contexts that are highly appropriate to consider for software. These three different analysis are used to value the three TSV contexts of software owned by an entity. The three contexts provide insight into; software inventory (OV) value, transaction (MV) value, and trade secret (ISC) value. In TSV, these three different value contexts are independent of each other. Consideration of these distinct value contexts helps the software owner with insight into; governance, investment, sale, exclusive licensing, digital rights management and apportionment.
In the mid 1980s, Data Securities International, as the world's leader in software escrow services, introduced a software valuation concept called Total Software Value [TSV] to better determine the ownership value and risk factors of software assets. Read the 5 articles on Software Valuation for a better understanding of TSV found in the Article section of this website.
The TSV valuation contexts work in conjunction with a Software Audit, such as FASB 141/142 purchase price allocation, to provide a “registered” ownership value for software in certain situations. The ownership valuation looks at the sum total of all the various Intellectual Assets (IA) or software components that are for internal use only or that have not been released in a product to go with a total software valuation. This ownership valuation is also used as a basis to prepare a fair or market value analysis.
Software IP M&A Due Diligence and Best Practices
It is widely recognized that during many financial transactions, such as a software based company acquisition, that the Intellectual Property (IP) and Intellectual Assets (IA) are the last components to be audited and valued. An IP/IA and Software Audit provides an analysis and ownership value for these components following standard and expert opinion guidelines. With IP and IA in many situations being the reason the business is valuable, experts agree a fundamental switch has occurred in the last fifteen years, in which the composition of the typical company has transformed from one in which close to 70 percent of the value resides in the physical assets to one in which 70 percent of the value resides in the intangible assets. V3Data would work closely with companies such as Intellectual Assets, Inc. , IP Metrics , and IP law firms to provide this comprehensive service.
Software and Software Records in the Cloud
Ever since its inception, the SEC Title 240.17a-4(f)(3)(vii) regulation has proven to be rather confounding to the Wall Street Broker Dealers (BD)- looking to comply with the specific Third Party requirement (which later came to be widely known as Designated Third Party (D3P) requirement)- and to the software/service providers (SP) looking to serve their clients. V3Data team has been amongst the first who fulfilled the D3P undertaking with the SEC in the 1990s, and has since attained extensive experience and a pioneer status in the field. V3Data employs its expertise to help the BDs and the SPs the scope, specifics, challenges, qualifications, implementations, and risk assessment associated with the regulation. Related terms include documentation, testing, audit, Letter of Undertaking, e-record types, email, CMS, COLD, back-office, trade data, in-house systems.
Software Escrow Analysis
Having a source code escrow account with a third-party escrow agent, like Databank, can be a valuable tool for all parties in a software license or other software transaction. To obtain best results and mitigate risk, several key decisions regarding the selection of an agent, the overall level of need and operational requirements, materials and format of the deposit contents, delivery conditions, verification processes or delivery must effectively and efficiently integrate those functions into existing operations. V3Data offers consulting and guidance for software escrow in either a transactional or operational context. In selecting an appropriate escrow agent, auditing of the escrow deposit, to interpreting the verification reports, V3Data can be of service to all parties.
Software based Trade Secret Escrow Management
V3Data trade secret key management helps to manage the life cycle of cryptographic keys associated with a trade secret escrow account, including the creation, distribution, validation, update, storage, usage, and expiration of keys and trade secret escrows. Should escrows become forgotten, and available to authorized parties, then the trade secrets are at risk. Putting plain text trade secrets into an escrow account may be unwise. V3Data provides for management of encrypted trade secret escrows and key recovery. Related terms include trade secret escrow, commercial key recovery, cryptographic backup and recovery, and trusted third party techniques. Trade secret escrow, as proposed by most software escrow companies, involve storing keys and trade secrets directly with the same third-party escrow agent. V3Data works with the escrow agent and trade secret owner to provide the extra layer of security to the trade secret escrow account.
Software License & Patent Portfolio Strategy Services
Software and Patent Portfolio Consulting - V3Data with Databank and Intellectual Assets Inc. can provide software and patent portfolio management recommendations assist with business transaction negotiations, software or patent license risk mitigation expertise and royalty rate support.