Protecting Intellectual Property Rights while Offshoring

May 25, 2016 5:31 pm | Updated 5 months ago.

Intellectual property Rights (IPR) that gives rights of ownership to a software design or a software program or even a software process is at the core of IT industry. It is, therefore, only natural that the customers want to ascertain that the offshore vendor will protect the IPRs belongings to not only the customer but also other suppliers engaged by the customer that the offshore vendor will be interacting with.

The first step towards ensuring that the offshore vendor protects the IPRs belonging to the customer is for the customer to be able to clearly communicate to the offshore vendor, what it is that the offshore vendor needs to protect. Essentially the IPR can fall into any of the following three categories. Each category offers protection for different aspects of software:

  1. Copyrights: Copyright Laws provide protection for source and object codes as usedfor example, in search algorithms or any other unique method by which the program solves a specific problem. Such programs or algorithms need to be marked as copyrighted and intimated to the offshore vendor.
  2. Patents: Patents can be obtained for other aspects of software solutions like software processes or process workflows etc. If usage of certain Icons or even fonts needs to be protected then a “Design Patent” can also be obtained and communicated to the offshore vendor.
  • Trade Secrets: Trade Secrets are certain unique concepts or ideas that have been embedded in the software. The customer does not have to communicate the Trade Secrets to the offshore vendor. However, if at any time the customer feels that the trade secrets have been stolen by the offshore vendor, then the customer needs to prove that the trade secret was not known to the vendor before the vendor got access to the customer’ software and adequate steps were taken by the customer to protect the trade secret.

Having discussed above the types of IPR that the customers need to protect contractually before awarding the contract to the offshore vendor, let us now look at the responsibilities of the offshore vendor in protecting the IPR. Respecting IPR and ensuring that all the IPRs of the customer and its associates are protected is as much of a cultural issue as contractual.  In addition to ensuring that the IPR protection is adequately covered in the contracts, the customers also need to assess the awareness towards IPR protection both in the customer’ organization as well as the specific country to which the engagement is being outsourced.

One of the ways for the customer to assess the IPR awareness in a specific country or in a global offshore vendor is to look at the data, report and statistics published by WIPO (World Intellectual Property Organization), a global forum for IPR related services with over 150 member states. The level of IPR related activities in a country will usually indicate the level of awareness and respect that is given to IPR by the vendors from that country.

Now coming to specific steps that are being taken by the offshore vendors in India to ensure that there is adequate IPR protection:

  1. Physical and Electronic separation of the customer specific Offshore Delivery Center (ODC)
  2. Data Center separation
  3. Physical security checks
  4. Access Cards and Biometrics
  5. Firewalls and Virus protection
  6. Encryption at disk, file and network level
  7. Network monitoring
  8. Periodic audits, both internal and external.

Implementation of adequate processes towards IPR protection by a Partner is one of the prerequisites of it being a part of the D2E offshore outsourcing Aggregator Platform.