Security Of Ipr With Outsourcing

IPR (Intellectual Property Right) and its security is very important when we talk of Outsourcing

. Before discussing its importance we must understand the meaning of Intellectual Property. Intellectual property is referred as something created by persons mind i.e. expression of an idea. And when we talk of protecting this creation or idea from being copied by someone else its referred as Intellectual Property Right.

After knowing the meaning of IP and IPR lets come to nature and importance IPR with outsourcing. Nature of Intellectual Property varies across various industries and different types of business. However, Software development outsourcing is the area where it holds high level of importance. As high level of knowledge sharing is involved between the vendor and the customer in case of outsourcing. This is one reason that intellectual property management and data protection issues are increasingly important for the businesses that utilize outsourcing services for their work.

During the process of outsourcing, customer transfer their intellectual property to the vendor which may include Data, business plans, inventions, software and other confidential information. Some of this information may belong to third party which involves licenses. To manage effective information sharing, respective IP must be administered by both customers and vendors.

There are 2 IP related critical concerns in outsourcing.

Ownership of IP

Willful or accidental disclosure of trade secrets or any confidential information.

Precautions to overcome the above stated critical IP related concerns-

Conducting IP due diligence.

Thorough evaluation of the vendor.

Taking measures for IP protection.

IP Due Diligence

Customer organization must conduct IP due diligence and risk assessment before taking any outsourcing initiative. It will help the organization in safeguarding its IP and evaluating which work to be done in house and what should be outsourced.

Now lets talk about some indicative steps that must be taken for IP due diligence-:

To identify areas of the business which have critical importance

Assessing business knowledge carefully and determining if outsourcing it will compromise the company practices.

Identification and documentation of all IP related issues associated with outsourcing.

Determining ownership rights in IP

Reviewing jointly- owned or third party IP

Assessing of legal infrastructure in the foreign country for protecting IP

Determining enforcement and Jurisdiction

Defining termination, expiry clause

Conducting Due diligence helps the customer in selecting the potential vendor or outsourcing partner. Initiation of business negotiations must be done only after being satisfied with the reputation , compatibility and resources of the vendor. The main focus should be on the steps that must be taken by both the parties to safeguard and ensure that IP is used and shared properly during and after the relationship.

Evaluation and selection of vendor

There are certain things that must be kept in mind before selecting a vendor for outsourcing:-

It must be checked that vendor has information security management policy which is documented and enforceable.

Vendors data security and Ip protection practices must be reviewed.

It must be checked if some extra security policies can be added for additional security of sensitive data.

It must be insisted that all source code of the application must be your personal property that is legally protected.

It must be checked out if Vendor is involved in any business with your competitors.

An established partner must be chosen that complements your business strategy and understands the level of security required.

So these are some of the areas where a customer must concentrate before selecting the vendor for outsourcing its work. Now lets talk about some of the measures that must be taken for protection of Intellectual Property.

Measures for IP protection

Physical Protection

Electronic Protection

Legal Protection

Physical Protection

Data security should be treated as exigency.

Access to full information must be limited to some people.

Vendor must possess physical secure facility.

Computer must be used without the use of removable media to minimize the risk of unauthorized access to IP.

Electronic Protection

Measures such as firewalls, Encryption and VPN must be used to prevent breaches in an electronic environment.

Source code of the application must be protected using passwords and it must be checked that they are not widely available.

Original copy must be maintained for the source code.

Real information must not be relieved by any test data.

Legal protection

Legal system of the country must be determined to understand what jurisdiction it has over contracts.

Working of IPR enforcement in the country must be analyzed.

Compliance audit procedures must be defined clearly before any engagement.

Ownership of source code and licensing must be clarified

Mechanism for resolution of disputes must be defined

After discussing all the issues we are clear about IP, IPR and the security measures. To be safe all these issues are documented under an agreement called NDA (Non-disclosure agreement). This is the agreement which specifies that all confidential data or IP of both the parties will not be disclosed to any third party. Before any further engagements all the issues are discussed and documented by both the parties to avoid further disputes in that case.

by: OTS Solution

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