How to get rich on the work of a fallen software house

EDITORIAL: There is money to be made from the software of defunct developers. Some of it is locked in vaults, but anyone can ask for the keys and find a Bill Gates starter kit: source code, documentation, maintenance tools, compilation and execution procedures, even the names and addresses of the boffins who wrote it.

This is speculation, but I think it might work. The first reason is a provision of the Companies Act that says any assets of a dissolved company will be bona vacantia – meaning they belong to the Crown. A liquidator can value and sell everything from a company's furniture to its computers with relative ease; but intellectual property is harder to identify and much harder to value. These intangibles include the copyright in software and, if unsold, they become the property of the Crown. The Crown cannot advertise everything it acquires in this way because it simply does not know what it owns. Given the youth of the software market, the 70-year duration of copyright in software and the large number of software companies that have fallen over the years, it is reasonable to assume that the Crown owns a lot of rights.

The other reason this could work is that software will often be preserved in escrow. Buyers of business-critical software frequently demand that developers deposit a copy of the source code with a third party, known as an escrow agent. This source code is the formula that lets a new developer adapt and improve an original work. It is held by the escrow agent until a trigger event, such as the developer going out of business, described in a contract. I know of at least one escrow company that has been building a massive archive of source code since the early 1980s.

Escrow agents typically release source code only if a party to the agreement notifies them of a trigger event. That can mean them holding the code indefinitely. Discs and manuals take up little space. And while the escrow agent charges for retention, I'm told by an agent that the materials are unlikely to go in the bin in the event of non-payment, given the risk compared with the low cost of continued retention.

Now, if a developer has gone out of business, a working copy of its software is unlikely to be much use if someone wants to work with the source code to make updates. That is why escrow agreements often demand a lot of supporting material, right down to the phone numbers of key engineers. This is great news for an entrepreneur.

The biggest challenge is the treasure hunt: finding a piece of software from a defunct developer that is ripe for exploitation. If such a gem is identified, an entrepreneur can reveal his finding to the Treasury Solicitor and negotiate a price. The buyer will want to make payment contingent upon getting the source code – and escrow agencies are a good place to search. Once you hold the rights in the code, they'll surely release to you as the new copyright owner, though they'll be justified in seeking unpaid storage arrears.

I don't know if anyone has tried this – it just strikes me as an interesting idea. Can you get rich selling someone else's software after they tried and failed? Maybe. Back in 1981, all rights in an under-exploited piece of software called QDOS were bought for $50,000 by a start-up called Microsoft. Some tweaking and a re-brand produced MS-DOS. Further work and another re-brand and the Windows operating system was born. It didn't do too badly.