Can You Protect Your IP When Outsourcing In India

What is the ac­tual de­f­i­n­i­tion of Intellectual Property?

According to the Australian Government pro­vided de­f­i­n­i­tion, IP is the ap­pli­ca­tion of the mind to de­velop some­thing new or orig­i­nal. Further to this they ex­plain that it can ex­ist in var­i­ous forms; a new in­ven­tion, brand, de­sign or artis­tic cre­ation. But what should be of con­cern to en­tre­pre­neurs (who in­tend to cap­i­talise on the in­tel­lec­tual prop­erty they have cre­ated) is the em­pha­sis Government places on the strate­gic man­age­ment of said IP. Strategic man­age­ment en­com­passes a whole range of processes, how­ever, in re­la­tion to off­shore soft­ware de­vel­op­ment IP pro­tec­tion is the most im­por­tant.

In Australia we are blessed with a sturdy le­gal frame­work whereby IP rights are of­ten au­to­mat­i­cally ac­knowl­edged or al­ter­na­tively pro­tected through a sim­ple reg­is­tra­tion process. Of course, in the con­text of code cre­ation, the process can be some­what pro­tracted due to the new le­gal ter­ri­tory the tech­nol­ogy in­dus­try is en­croach­ing on. Yet our or­ganic, com­mon law based sys­tem, that grows in sync with in­dus­try, has adapted to pro­vide a safety-net of IP se­cu­rity even on the tech fron­tier. Unfortunately, the same may not be said for all ju­ris­dic­tions of our off­shore soft­ware de­vel­oper coun­ter­parts …


Intellectual prop­erty law in India; where does the dan­ger lie?

The trend of out­sourc­ing soft­ware de­vel­op­ment to India is un­de­ni­able, with one of the ma­jor draw cards widely con­sid­ered to be the cost ef­fi­ciency. As I have al­ready out­lined in my null hy­poth­e­sis ar­ti­cle; not only is the cer­tainty of cost ef­fi­ciency when off­shoring a myth, so too is the idea that the Indian le­gal sys­tem will af­ford you any sort of copy­right pro­tec­tion.

Indian of­fi­cials are con­sid­ered by some to have a lais­sez faire at­ti­tude to­ward IP li­cens­ing and gen­eral rights pro­tec­tion. This non-fussed men­tal­ity in re­la­tion to copy­right and patent law in India has al­ready caused is­sues for the European-Indian trade part­ner­ship, par­tic­u­larly in the phar­ma­ceu­ti­cals in­dus­try. More re­cently the copy­right con­cerns have be­come more preva­lent in India’s bur­geon­ing tech in­dus­try, po­ten­tially pos­ing a dan­ger to in­ter­na­tional firms in­tent on off­shoring soft­ware de­vel­op­ment. The mo­ti­va­tion be­hind vi­o­la­tions of copy­right law in India is the quick-fix cash in­jec­tion to the econ­omy it can pro­vide, but in essence this com­pla­cent stance to­ward in­tel­lec­tual prop­erty rights is­sues is no dif­fer­ent to steal­ing.

When it comes to the fun­da­men­tals, as a com­mon law ju­ris­dic­tion you would think that pro­tec­tion of in­tel­lec­tual prop­erty in India would be a sim­i­larly struc­tured beast to our Australian sys­tem. In most re­spects the two are sim­i­lar in na­ture, how­ever the fa­tal flaw in India is the of­ten lack-lus­tre per­for­mance of en­force­ment of­fi­cials. It’s all well and good that in­tel­lec­tual prop­erty law in India sits on the same up­per ech­e­lon as Australian leg­is­la­tion, but if these laws are not ro­bustly ap­plied then the sys­tem is - in a word - su­per­flu­ous.

On this point it would be un­wise not to flag the ex­pense in­volved in launch­ing in­tel­lec­tual prop­erty lit­i­ga­tion in India. In a re­cent pub­li­ca­tion from the British Government’s Intellectual Property Office the ex­pense and time de­lay for dis­pute res­o­lu­tion in India was high­lighted as a key con­cern. Bureaucratic de­lay is known in India to be crip­pling to in­ter­na­tional busi­nesses at­tempt­ing to break into their re­spec­tive in­dus­tries, and these same is­sues are seem­ingly con­sis­tent across all facets of the econ­omy.

Could it crum­ble?

If all of this le­gal­is­tic jar­gon is a bit too airy fairy for you to get your head around, let me il­lus­trate the own­er­ship of in­tel­lec­tual prop­erty is­sues in India with a more tan­gi­ble ex­am­ple. Let’s say you’ve reg­is­tered your soft­ware de­sign with the rel­e­vant Indian Governmental body. You - as the pru­dent en­tre­pre­neur that you are - have en­sured you have all of the cor­rect pa­per­work. You’ve dot­ted your i”s and crossed your t”s, to put it sim­ply you’ve done every­thing right. But, when you are pro­vid­ing sen­si­tive ma­te­r­ial of worth to one of the many soft­ware de­vel­op­ment com­pa­nies in India, you dis­cover by way of a quick Google search, you are play­ing with fire. Your first deal­ing with the com­pany all might run smoothly, it may also go to plan the sec­ond time around, but there is cer­tainly a pos­si­bil­ity for it to all end in tears. While a se­cure ap­pli­ca­tion may pro­tect your source code, there’s mul­ti­ple ways to achieve the same out­come. What’s more im­por­tant is pro­tect­ing your idea.

Do your re­search

It’s worth not­ing that some com­pa­nies while seem­ingly based in one ju­ris­dic­tion may very well be op­er­at­ing across a num­ber of ju­ris­dic­tions. Let’s take the col­lapse of soft­ware de­vel­op­ment com­pany Appster as an ex­am­ple. The com­pany had 400 staff, the ma­jor­ity of which were sta­tioned in cheaper (from a HR per­spec­tive) over­seas lo­ca­tions like India and Russia. Appster boasted a num­ber of world­wide of­fices, from New York, to Melbourne. However with only 23 staff po­si­tioned in Melbourne, it’s un­likely any se­ri­ous de­vel­op­ment work was con­ducted within Australia. That raises IP pro­tec­tion is­sues you may not have con­sid­ered when deal­ing with what was seem­ingly a lo­cal com­pany. It’s al­ways best to get a di­rect an­swer on where the soft­ware will be built.

The Clincher

Maybe in the fledg­ling stages of your busi­ness’s de­vel­op­ment you find it nec­es­sary to over­look IP pro­tec­tion as a crit­i­cal con­cern, how­ever in do­ing so you may be set­ting your­self up for dif­fi­cul­ties down the track. Not only will it cause many a headache try­ing to link two very dif­fer­ent le­gal sys­tems, but the ex­pense to your busi­ness could very likely lead to un­ex­pected fi­nan­cial costs that could hin­der fu­ture pros­per­ity. So maybe be­fore tak­ing an un­nec­es­sary risk by off­shoring your soft­ware de­vel­op­ment, take a mo­ment to re­mem­ber there are ca­pa­ble com­pa­nies within our bor­ders that can of­fer just as much po­ten­tial suc­cess.

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David Burkett

Growth en­thu­si­ast and res­i­dent pom

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